Pomerantz Appointed Co-Lead Counsel in Loop Industries Securities Litigation
On December 28, 2020, U.S. District Judge Nelson S. Roman of the Southern District of New York appointed Pomerantz LLP as Co-Lead Counsel on behalf of Co-Lead Plaintiffs Sakari Johansson and John Jay Cappa in In re Loop Industries, Inc. Sec. Litig., 20-cv-8538 (S.D.N.Y.), a securities litigation being pursued on behalf of a class of defrauded investors concerning allegations that Loop Industries, Inc. (“Loop” or the “Company”) misrepresented costs, complexities and effectiveness of its ability to break down polyethylene terephthalate (“PET”) plastic and polyester fiber.
Loop is a technology company that purports to own proprietary technology that “depolymerizes no and low value waste PET plastic and polyester fiber, including plastic bottles and packaging, carpets and textiles… to its base building blocks (monomers).” The resulting material is used to create PET resin for food-grade packaging.
The complaint alleges that, between September 24, 2018 and October 14, 2020, the defendants failed to disclose that: (i) Loop scientists were encouraged to misrepresent the results of Loop’s purportedly proprietary process; (ii) Loop did not have the technology to break PET down to its base chemicals at a recovery rate of 100%; and (iii) as a result, the Company was unlikely to realize the purported benefits of Loop’s announced partnerships with Indorama Ventures Public Company Limited and thyssenkrupp Industrial Solutions AG (“thyssenkrupp”).
On October 13, 2020, Hindenburg Research published a report alleging, among other things, that “Loop’s scientists, under pressure from CEO Daniel Solomita, were tacitly encouraged to lie about the results of the company’s process internally.” The report also stated that “Loop’s previous claims of breaking PET down to its base chemicals at a recovery rate of 100% were ‘technically and industrially impossible,’” according to a former employee. Moreover, the report alleged that “Executives from a division of key partner thyssenkrupp, who Loop entered into a ‘global alliance agreement’ with in December 2018, told us their partnership is on ‘indefinite’ hold and that Loop ‘underestimated’ both costs and complexities of its process.”
On this news, the Company’s share price fell $3.78 per share, or 32.5%, to close at $7.83 per share on October 13, 2020.