It’s been a minute since Tilray (NASDAQ: TLRY) went public, but investor Michael Hudson is suing the company for what he claims are “ breaches of fiduciary duties, unjust enrichment, and waste of corporate assets, and violations of the Securities Exchange Act of 1934.” The complaint was filed on March 1 in the Southern District of New York and hinges on two sets of allegations. The court filing states, “The first category of false statements relates to the value of Tilray’s inventory and its gross margins. The second category of false statements relates to the entrance into, and the value of the Company’s agreement with Authentic Brands Group.”
The origin of Tilray was Privateer, a privately-owned Canadian-based business created by Brendan Kennedy, Michael Blue, and Christian Groh to invest in cannabis companies. In 2014, Tilray was formed as a subsidiary and in July 2018 the company went public through an IPO on the NASDAQ. At the time, it wasn’t lost on veteran stock watchers that after the company went public, Privateer ended up with an 82% ownership stake and 93% voting power. The limited amount of public shares caused the stock to pop on opening stock and drove attention to the green rush of cannabis stocks. The insiders had agreed to not sell shares for six months.
Once the lockup expired, the shares began selling off and Hudson claims that the deal with Authentic Brands was done to prop up the stock price and that it wasn’t actually the great deal...
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