DraftKings shareholders vie for lead plaintiff position in Hindenburg class action lawsuit
New court filings reveal multi-million-dollar damage claims lodged by individuals in aftermath of damning report into SBTech subsidiary
Shareholders in DraftKings have triggered competing class action lawsuits against the firm following June’s controversial Hindenburg Research report into its SBTech subsidiary.
Separate legal documents have been filed with the US District Court Southern District of New York from six law firms, all of which have been actively contacting DraftKings shareholders since June.
It follows detailed allegations made by Hindenburg Research, which short-sold DraftKings stock and suggested investors should offload their shares due to the alleged black-market activity of SBTech.
The revelations prompted a 4% drop in the company’s share price as the Securities and Exchange Commission (SEC) launched an investigation into DraftKings over claims published in the report.
Lawyers allege that DraftKings issued false or misleading statements and failed to disclose pertinent information on its SBTech subsidiary to investors, violating federal law in the process.
In one of the documents, as first reported by Law360, law firm Robbins Geller Rudman & Dowd claimed a loss of $217,456 acting on behalf of Walter Marino.
“The complaints allege that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that SBTech had a history of unlawful operations; accordingly, DraftKings’ merger with SBTech exposed DraftKings to dealings in black-market gaming; and this increased DraftKings’ regulatory and criminal risks with respect to these transactions,” the Marino filing states.
“As a result, DraftKings’ revenues were, in part, derived from unlawful conduct and thus unsustainable; accordingly, the benefits of the SPAC merger were overstated; and consequently, DraftKings’ public statements were materially false and misleading at all relevant times,” it adds.
DraftKings shareholder Marino is one of six plaintiffs put forward by the firm, all of which are competing to be named lead plaintiff on the class action lawsuit based on their significant financial interests.
The lead plaintiff retains the power to settle and release claims of all class action members, which potentially puts that individual at the front of the queue in respect of financial reparation.
Other proposed lead plaintiffs include The Schall Law Firm client Tim Kaintz, who lost $2.2m; Pomerantz LLP client Robert Downs, who lost $424,946; and The Rosen Law Firm PA client Stephen Goering, who allegedly lost $154,877.
Levi & Korsinsky LLP client Robert Mendoza is also seeking to recoup a loss of $33,560, while losses incurred by Glancy Prongay & Murray client Mario E. Ernst were not disclosed in court filings.