The complaint for this class action claims that rises in Zoompass stock prices were caused by a $2 million campaign to unlawfully promote its stock—a “pump-and-dump scheme.” It alleges that the company’s lack of disclosure of this violated the Securities Exchange Act of 1934.
The class for this action is all persons who acquired Zoompass securities between April 24, 2017 and May 24, 2017.
Zoompass Holdings is a Canadian company that offers a mobile money platform between businesses and their customers, and other mobile money solutions for international and domestic money transfers, contractors payments, direct payroll deposits, and bill payments.
The class period began on April 24, 2017, when Zoompass filed its 2016 annual report on Form 10-K. The report stated that the company’s disclosure controls and procedures were effective, so that information the company was required to disclose had been disclosed.
In a section on “Promoters and Control Persons” it claimed that the company “did not have any promoters at any time during the past five fiscal years.” It also claimed that “none of our executive officers or directors serve as executive officers or directors or on the compensation committee of another company that has any executive officer serving on our Board of Directors…”
On May 9, 2017, however, Zoompass revealed that it had been “requested by the OTC Markets Group, Inc. to comment on recent trading and potential promotional activity.” The announcment caused the stock price to fall by over 45% over several days.
On May 25, Seeking Alpha put out an article that claimed that Zoompass had been involved with promotion, according to the complaint, involving its CEO.
The article found the stock’s price rises to be “unwarranted.” Among other things, it said that “we have discovered advertisements on Google and Yahoo Finance that direct visitors to a website promoting Zoompass…” that “features a glaring report … that is quick to point our industry statistics and million dollar figures relating to ‘financial technology’ while lacking substance relating to the company’s internal business operations.”
It also suggested that Zoompass CEO Robert Lee, named in a Bloomberg bio as Robert Doherty Lee, might be the same person as CEO Robert Doherty of Pura Naturals, “another heavily promoted stock…” If the two were in fact the same, the article said, “we believe that investors should remain highly suspicious of the failure to disclose this relevant information in the SeC filings.”
At this news, the stock price fell again, by 23%.