RKS represented a substantial stockholder seeking fair value for his shares in Surterra, a company specializing in cannabis-based products. The matter proceeded as a Delaware appraisal action which permits, under certain circumstances, a shareholder to receive the “fair value” of his or her shares. This case arose after Florida-based Surterra merged with New England Treatment Access (NETA), a Massachusetts marijuana company with retail operations for recreational as well as medicinal use. Surterra's founder and former CEO engaged RKS for its expertise in appraisal actions in order to insure he received fair value for his shares of Surterra common stock in connection with that merger. The case posed unique valuation issues centered on the proper approach to valuing shares in a company specializing in cannabis-based products, where the consideration for the underlying merger was a combination of cash, stock and debt. Moreover, cannabis appraisals present the unique challenge of valuing a highly lucrative asset that is nevertheless currently illegal under US law. The parties ultimately reached a confidential settlement resolving these novel valuation issues.
RKS is currently representing long-time client Special Situations Funds as co-lead counsel for a class of public investors in the securities of Chembio a point-of-care medical diagnostics company. SSF's complaint alleges:
Chembio is alleged to have sold more than $30 million of inflated stock directly to the public, while representing in the offering documents that the DPP Test was "100% effective" and touting the Company's FDA "Emergency Use Authorization" to market the Test. Unbeknownst to investors, however, was at the very same time Chembio knew or should have known that the DPP Test actually did not effectively detect COVID antibodies and that the FDA was planning to revoke the Company's Authorization to sell its DPP Test. When the truth about the DPP Test was revealed in June 2020, the price of Chembio's stock plummeted, destroying hundreds of millions of shareholder value.
RKS provides strategic, bespoke litigation solutions to the investment management community to deliver outstanding results and increase investment returns. RKS attorneys are trusted partners to clients with more than $4 trillion AUM, and have decades of experience in value-enhancing litigation, including federal securities matters like the Chembio lawsuit as well as structured finance, creditor and debtholder rights, and valuation and shareholder rights litigation.