Recently, an investor sued Tilray Brands Inc. TLRY by alleging the Canadian pharmaceutical and cannabis company and popular cannabis stock “breaches of fiduciary duties, unjust enrichment, and waste of corporate assets, and violations of the Securities Exchange Act of 1934,” per the lawsuit.
Tilray, however, recently received approval from Delaware’s Court Of Chancery for a $39.9M settlement that would resolve the shareholder derivative suit and award $6.5M in fees and expenses to the plaintiffs’ attorneys, reported Law 360.
Background
According to the suit, the first category of false statements was related to the value of Tilray’s inventory and its gross margins, and the second category of false statements was related to the entrance into, and the value of the Company’s agreement with Authentic Brands Group (ABG).
The plaintiff claimed the Authentic Brands deal was made to prop up the stock price and was actually not as good as Brendan Kennedy (founder of Privateer, the origin of Tilray, a privately-owned Canadian-based business) claimed it to be. Hudson said that in the two quarters after its IPO on NASDAQ, “Tilray’s gross margins had fallen from 55% to 31%.”
A spokesperson for Tilray recently said the complaint was “substantially similar to the other derivative complaints filed in the [Southern District of New York] and in the District of Delaware, which are stayed pending the outcome of the securities class action motion to dismiss process.” Moreover, the company believed that the underlying claims of these actions were without merit.
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