The suit was filed by Federman & Sherwood in the United States District Court for the Eastern District of Pennsylvania.
It represents entities that purchased Evolution shares between 14 February 2019 and 25 October 2023 – known as the class period. It alleges that within this timeframe, Evolution made untrue or misleading statements in regards to its growth potential, customer compliance, the company’s compliance and the effect of non-compliance on revenue.
Martin Carlesund, Evolution CEO and Jacob Kaplan, chief financial officer are named as defendants.
The complaint lists a number of incidents that took place between 24 January 2022 and 26 October 2023. These had a subsequent effect on Evolution’s share prices. The filing states that these represent proof of Evolution’s non-compliance.
Specifically, the complaint alleges violations of Section 10(b) of the Securities Exchange Act and Rules 10b-5 promulgated thereunder, as well as violations of Section 20(a) of Section 20(a) of the Securities Exchange Act. These sections prohibit any attempts at defrauding investors through untrue statements and or omitting facts.
The suit aims to recover damages from all investors that purchased securities within the class action period.
What does the lawsuit outline?
On 24 January 2022, a report released by Analyst Generation Limited was made available to certain investors. Ensuing media coverage said the report outlined two main allegations – that a portion of Evolution’s revenue “could be at risk due to future regulatory clampdowns”, and that Evolution had been “exposed to revenues from what we believe to be illegal gambling activities”.
Following this, the price of Evolution’s American Depository Shares (ADS) fell by 14.68% across the subsequent three trading sessions.
On 26 April 2022, Australia’s gambling regulator called for the country’s internet service providers to block six online gambling sites for alleged illegal gambling. Five of these six sites were direct or indirect customers of Evolution. Evolution’s ADS fell by 6.22% across the next two trading sessions following the news.
On 4 May 2022, the Swedish Administrative Court upheld three penalties against brands operated by ComeOn. The penalties were in relation to bonus rule violations. ComeOn is a subsidiary of Cherry AB, an Evolution customer.
Woes in Q1 and Q3 for Evolution
Evolution’s Q1 2023 results revealed a stagnation in its RNG business segment. In addition, its North American business grew only slightly. This was also the case in its Q3 results.
An earnings called held in relation to its Q3 results revealed that Evolution also faced delays in opening new studios.
Following these Q1 and Q3 results, Evolution’s ADS price fell by 8.23% over the next four trading sessions and 7.61% over the next two respectively.
Evolution has not published a response to the allegations.
Original article: https://igamingbusiness.com/legal-compliance/legal/evolution-class-action/
