TORONTO - Quantum (NASDAQ:QMCO) BioPharma Ltd. (NASDAQ:QNTM)(CSE:QNTM)(FRA:0K91), a biopharmaceutical company, has initiated legal action against CIBC World Markets and RBC Dominion Securities for alleged market manipulation. The complaint, filed Sunday in the United States District Court for the Southern District of New York, accuses the defendants of employing "spoofing" tactics to artificially depress the company's stock price, resulting in damages exceeding $700 million USD.
The lawsuit claims that from January 1, 2020, to August 15, 2024, the defendants and/or their customers repeatedly manipulated Quantum BioPharma's share price. Spoofing, as defined by FINRA, involves placing and quickly canceling large volumes of orders to create a false appearance of market interest.
The company's share price, which stood over $460 USD in January 2020, plummeted to $7.55 USD at market close on the previous Friday, reflecting a significant loss in market capitalization. Quantum BioPharma alleges that the defendants spoofed the market hundreds of times, harming both the company and its retail investors.
Christian Attar Law Firm and Freedman Normand Friedland LLP, representing Quantum BioPharma, have taken the case on a contingency basis, mitigating the cost burden on the company. James Wes Christian of Christian Attar Group remarked on the case's potential severity, while Velvel Freedman of Freedman Normand Friedland LLP highlighted the lawsuit's importance for the client and the protection of shareholder equity.
Quantum's CEO, Zeeshan Saeed, emphasized the company's commitment to seeking justice for its shareholders. While the current complaint names CIBC and RBC, Quantum BioPharma suggests that other banks and brokers might be implicated, pending further evidence.
This legal development follows Quantum BioPharma's efforts to innovate in the treatment of neurodegenerative and metabolic disorders and alcohol misuse disorders. The company, through its subsidiary Lucid (NASDAQ:LCID) Psycheceuticals Inc., is developing Lucid-MS, a compound designed to prevent and reverse myelin degradation in multiple sclerosis.
The information in this article is based on a press release statement from Quantum BioPharma Ltd.
In other recent news, wellness and recovery supplement company, Celly Nutrition Corp., has secured a master distribution agreement with FUSION Consulting Group to distribute its alcohol metabolism supplement, unbuzzd™, across Puerto Rico, the Caribbean, and parts of Central and South America. The product is designed to support the body's natural processes for metabolizing alcohol and promoting alertness. The agreement is expected to leverage FUSION's experience in growing brands within the region to increase the footprint of Celly Nu's product.
In parallel, Quantum BioPharma Ltd., which holds a 25.71% ownership of Celly Nutrition, has entered into an agreement with Ingenu CRO Pty Ltd. to conduct an observational clinical study on primary progressive multiple sclerosis (MS). The study is a precursor to a future phase 2 clinical trial of the drug candidate Lucid-21-302, also known as Lucid-MS.
On a different note, FSD Pharma Inc. has settled debts by issuing 650,000 Class B Subordinate Voting shares and won a court judgment against its former CEO, Dr. Raza Bokhari, who is now required to pay over CAD $2.9 million plus interest. The company also received approval to commence a Phase 1 clinical trial for its drug candidate, Lucid-21-302, for treating multiple sclerosis. Additionally, FSD Pharma has been given approval to start its METAL-2 trial in the United States, exploring treatments for acute alcohol intoxication. These are the latest developments in the biopharmaceutical sector.
InvestingPro Insights
As Quantum BioPharma Ltd. (NASDAQ:QNTM) embarks on this significant legal battle, investors may find additional context from InvestingPro's real-time data and tips particularly relevant.
According to InvestingPro data, Quantum BioPharma's market capitalization stands at a modest $14.15 million USD, reflecting the severe decline in share price mentioned in the article. This dramatic fall is further emphasized by the InvestingPro Tip indicating that the stock price has fallen significantly over the last year, with a staggering -89.54% one-year price total return as of the most recent data.
Despite the legal challenges and stock price decline, InvestingPro Tips suggest some potential positives. The company holds more cash than debt on its balance sheet, which could provide some financial stability during this tumultuous period. Additionally, analysts predict that the company will be profitable this year, which may offer a glimmer of hope for investors.
However, it's important to note that the company was not profitable over the last twelve months, with an adjusted operating income of -$10.59 million USD. This aligns with the lawsuit's claims of significant financial damage due to alleged market manipulation.
The stock's recent performance has been volatile, with InvestingPro data showing a significant 56.64% return over the last week and an 82.81% return over the last month. This volatility is consistent with the InvestingPro Tip that the stock generally trades with high price volatility, which investors should consider in light of the ongoing legal situation.
For those interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for Quantum BioPharma, providing a deeper understanding of the company's financial health and market position during this critical time.
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