An investor files a class action lawsuit against Montreal-based electronic payment systems company Nuvei, which it accuses of spreading “false and misleading information” in its recent announcement of a business association with the actor-investor Ryan Reynolds.
In his motion filed in the Superior Court of Quebec, in the days following Nuvei’s announcement on April 17, this Montreal investor alleges that “the press release issued by Nuvei leaves the false impression that [Ryan] Reynolds has indeed invested in Nuvei , when in fact he didn’t invest a dollar in Nuvei, but was given shares of the company in the form of restricted stock units (RSUs) worth $25 million. dollars”.
The instigator of the request argues that “the press release contains materially false and misleading information, because [Ryan] Reynolds never invested his money in Nuvei. Defendants [Nuvei and Ryan Reynolds] used the words ‘investing, investing and investors’ in the press release in an effort to support Nuvei’s troubled share price.”
According to the instigator of the class action petition, “the donation of restricted stock units is instead a payment made by Nuvei to Reynolds in exchange for Reynolds’ support of Nuvei and its stock market value, with posts on its social media and media appearances through interviews and commercials” which also features Philip Fayer, Chairman and CEO of Nuvei.
Claiming to act on behalf of “thousands of investors in Nuvei shares” since September 2020, the instigator of the petition asks the Court to authorize the class action in order, as a first step, to be able to determine the veracity and the exact tenor of Ryan Reynolds’ “personal investment” in Nuvei’s share capital.
Secondly, in the event of a finding of violation of the regulations of financial information on the stock exchange, the class action aims to determine an “amount of damages and compensation” for investors in Nuvei shares who would have been misled. by his announcement of a business association with Ryan Reynolds.
In response, Nuvei management has yet to file a formal response to the class action petition filed last Thursday, April 19.
Meanwhile, for the management of the Montreal company, this is a second embarrassment to manage in the space of a few days.
And this, while shares of Nuvei have regained some momentum on the stock market after a difficult year 2022 for shares of technology companies.
In fact, for the second time in 16 months, Nuvei, whose shares are listed on the Toronto Stock Exchange and the American NASDAQ, has been targeted by a New York investment firm by selling shares short.
In a report published last week, Spruce Point Capital argues that Nuvei lacks transparency and that management has notably concealed the extent of the company’s exposure to cryptocurrencies as well as a partnership with the fallen exchange. FTX cryptocurrencies, in which Nuvei apparently held a stake.
Spruce Point says it got its information from a former executive of Simplex, a company purchased by Nuvei in 2021.
The report points out that Nuvei should disclose any income or pecuniary benefit received from FTX.
“Nuvei also failed to provide investors with a transparent view of its total crypto exposure,” reads the Spruce Point document, which argues that the exposure in question increased after the Simplex acquisition. .
In December 2021, Spruce Point Capital first attacked Nuvei saying it was concerned about biographical statements about executives, company acquisitions, exposure to high-risk and unsupportive sectors. ESG (environmental, social and governance) investment, and the likelihood that Nuvei will fail to meet financial expectations deemed ambitious.