CannTrust stock is making gains today after the Ontario Superior Court of Justice awarded a consortium of law firms carriage of a proposed securities class-action against CannTrust Holdings Inc (TSX:TRST) (NYSE:CTST).
Scandal Sinks CannTrust Stock
The case is centered around the CannTrust illicit cultivation scandal that rocked the Canadian market last summer when regulators found cannabis growing in several unlicensed rooms at the company's Pelham facility, with awareness of the operation going as high as the CEO's office. The fallout had a disastrous impact on CannTrust stock, as the firm had its licenses suspended, was slapped with a cease trade order, and forced to destroy C$70 million worth of product.
CannTrust stock reached a bottom of just $1.00 in early December, having traded for as high as $13.50 less than eight months earlier, but there have been signs of life for the embattled pot stock in recent weeks following several analysts upgrades. The company now has a chance to put its troubles behind it as the securities class-action brought against it following that scandal looks finally set to go to trial.
An Opportunity for Closure?
The lawsuit was initially brought against CannTrust Holdings in August of last year but was delayed due to competing sets of law firms that were vying to take on a similar class-action case against the firm. In a situation where multiple lawsuits are filed in the same jurisdiction against the same entity, the courts must determine which case best represents the interests of the class members—in this case, investors in CannTrust stock between October 1, 2018, and September 17, 2019.
Prominent litigator Marie Henein, who successfully defended former Ontario attorney general Michael Bryant after he was charged with criminal negligence causing death, will lead the case against CannTrust, saying, “we look forward to bringing this case before the courts at the earliest opportunity so that the rights of the class members can be addressed in a fair and timely way.” CannTrust stock is currently up 2% as the company finally prepares to move on from its troubled past.
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