Evolution faces US lawsuit over “materially false” statements as plaintiffs seek damages

Evolution investors have launched a class action lawsuit against the live casino giant in relation to “misleading statements” which they claim resulted in a “significant change” to the supplier’s share price.

The lawsuit, which was filed in the United States District Court for Eastern District of Pennsylvania by litigation firm Federman & Sherwood, names Evolution as well as its CEO Martin Carlesund and CFO Jacob Kaplan as defendants.

The plaintiffs assert that between 14 February 2019 and 25 October 2023, the “defendants” made “materially false and/or misleading statements” relating to three core reporting aspects.

The lawsuit states that Evolution produced these misleading statements in regard to “compliance with governing laws; the effect of non-compliance on Evolution’s revenue; and Evolution’s predicted growth and growth strategies”.

Federman & Sherwood argue that Evolution’s “falsities” were brought to light following a series of disclosures made between 24 January 2022 and 26 October 2023.

Those disclosures related to Evolution’s compliance, revenue and growth according to the law firm.

Federman & Sherwood said: “As a result, Evolution saw a significant change in the value of its share prices, including its American Depository Shares (“ADS”).

“The complaint alleges violations of Section 10(b) of the Securities Exchange Act and Rules 10b-5 promulgated thereunder, and violations of Section 20(a) of the Securities Exchange Act.”

Rule 10b-5 relates to fraud, with violation claims needing to be proven that misrepresenting material facts was done so knowingly, and that the plaintiffs relied on defendants’ material misrepresentation.

Section 20(a) of the Securities Exchange Act states: “Any person who violates any provision of this title or the rules or regulations thereunder by purchasing or selling a security while in possession of material, non-public information shall be liable in an action in any court of competent jurisdiction to any person who, contemporaneously with the purchase or sale of securities that is the subject of such violation, has purchased (where such violation is based on a sale of securities) or sold (where such violation is based on a purchase of securities) securities of the same class.”

The plaintiffs are seeking to recover damages on behalf of all Evolution investors that purchased securities, including ADS during the five-year period.

News of the lawsuit had a limited impact on Stockholm-listed Evolution’s shares, which are down 1% at the time of writing. Over the past five years the stock has surged more than 1,000%, swelling its market cap to SEK258bn (£19.4bn).

EGR has contacted Evolution for comment.