**POMERANTZ LLP ANNOUNCES CLASS ACTION LAWSUIT AGAINST APPLIED DIGITAL CORPORATION**
*Seeking damages for violations of federal securities laws*
*New York, Aug. 20, 2023* – Pomerantz LLP, a leading law firm, has filed a class action lawsuit against Applied Digital Corporation (“Applied Digital” or the “Company”) (NASDAQ: APLD) and certain officers. The lawsuit is on behalf of individuals and entities who purchased Applied Digital securities between April 13, 2022, and July 26, 2023, seeking damages caused by the defendants’ violations of federal securities laws.
If you are a shareholder who purchased Applied Digital securities during this period, you have until October 11, 2023, to ask the court to appoint you as the Lead Plaintiff for the class. You can obtain a copy of the Complaint at *www.pomerantzlaw.com.* To discuss this action, contact Robert S. Willoughby at newaction@pomlaw.com or call 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980.
## Applied Digital’s Business Operations and Misrepresentations
Applied Digital, formerly known as Applied Blockchain, is a North American company specializing in datacenters, artificial intelligence (AI) cloud services, and computing datacenter hosting. In April 2022, the company conducted an initial public offering (IPO), issuing 8 million shares of common stock at $5.00 per share to raise approximately $40 million.
The IPO was underwritten by B. Riley Securities, Inc., a subsidiary of B. Riley Financial, Inc., a diversified financial services platform. The offering documents outlined the close connections between Applied Digital and B. Riley. For instance, the CEO of Applied Digital, Wesley Cummins, had sold a majority interest in a registered investment adviser to B. Riley Financial, becoming President of B. Riley Asset Management. Additionally, two members of the Board, Chuck Hastings and Virginia Moore, had affiliations with B. Riley.
Despite these ties, the IPO Prospectus assured investors that Applied Digital had structured its board composition and corporate governance to meet the requirements of NASDAQ. However, the complaint alleges that throughout the Class Period, Defendants misrepresented the company’s business, operations, and compliance policies. Specifically, they allegedly overstated the profitability of Applied Digital’s datacenter hosting business and its ability to transition successfully into a low-cost AI Cloud services provider.
Moreover, the complaint asserts that Applied Digital’s Board of Directors did not fulfill the independence criteria set by NASDAQ listing rules. These misrepresentations, once revealed, were likely to expose the company to significant financial and reputational harm.
## Scrutiny and Short Reports
In July 2023, market analysts began questioning Applied Digital’s business model and exploring the connections between the company and B. Riley. Wolfpack Research and The Bear Cave published separate short reports on Applied Digital. The Wolfpack report questioned the viability of the company’s business model, alleging that Applied Digital used deceptive tactics to inflate its stock by claiming to pivot from a bitcoin mining business to an AI Cloud service provider. The Bear Cave report detailed Applied Digital’s problematic corporate history and highlighted its reliance on puffery over substance.
Following the publication of these short reports, Applied Digital’s stock price plummeted by 14.16% on July 6, 2023. Subsequently, on July 26, 2023, The Friendly Bear published a report expressing the view that B. Riley’s control over managerial decisions at Applied Digital was to the detriment of the company’s shareholders. It also asserted that Applied Digital’s board did not meet the independence requirements set by NASDAQ rules and was essentially controlled by B. Riley.
The allegations made in the class action lawsuit against Applied Digital raise concerns about the accuracy and transparency of the company’s representations. Shareholders who purchased Applied Digital securities during the Class Period may have suffered financial losses due to these alleged misrepresentations.
## Editor Notes
In the world of AI and technology, it is crucial to trust and rely on accurate information. GPT News Room is dedicated to providing the latest and most reliable news on AI and related technologies. Stay updated with the latest developments and insights by visiting *gptnewsroom.com.*
*H2*: **Applied Digital’s IPO and Close Ties with B. Riley**
Applied Digital conducted an initial public offering in April 2022, raising approximately $40 million. The IPO was underwritten by B. Riley Securities, Inc., a subsidiary of B. Riley Financial. The offering documents displayed the close connections between Applied Digital and B. Riley, with key executives serving in leadership roles in both companies.
*H2*: **Misrepresentations and Corporate Governance**
Throughout the Class Period, Applied Digital allegedly made misleading statements about its business, operations, and compliance policies. The complaint alleges that the company overstated the profitability of its datacenter hosting business and its ability to transition successfully into an AI Cloud services provider. Moreover, Applied Digital’s Board of Directors was accused of not fulfilling the required independence criteria.
*H2*: **Scrutiny and Short Reports**
In July 2023, market analysts published short reports questioning Applied Digital’s business model and highlighting its connections with B. Riley. The reports raised concerns about the veracity of Applied Digital’s claims, and the company’s stock price suffered a significant decline following their publication.
## *Editor Notes*
In the world of investing, transparency and accuracy are paramount. It is essential for shareholders and market participants to have access to reliable information. GPT News Room is committed to delivering trustworthy news and insights on AI and related technologies. Stay informed with the latest updates by visiting *gptnewsroom.com*.
In conclusion, the class action lawsuit against Applied Digital Corporation raises questions about the company’s transparency and compliance with federal securities laws. Shareholders who purchased Applied Digital securities during the Class Period may have suffered financial losses due to alleged misrepresentations. It is crucial for investors to stay informed and seek legal recourse if their rights have been violated.
*Editor Notes:*
This case highlights the importance of thorough due diligence and investor protection. The allegations against Applied Digital demonstrate the potential risks associated with misleading statements and inadequate corporate governance. It is crucial for investors to rely on accurate information and exercise caution when making investment decisions. Stay updated on the latest news and developments in the world of AI by visiting GPT News Room at *gptnewsroom.com*.
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