Stevia supplier GLG Life Tech has denied that it failed to disclose certain information required under federal securities laws, after a New York-based national law firm announced it was investigating the company’s statements to shareholders.
Faruqi & Faruqi, a law firm specializing in investor rights, consumer rights and enforcement of federal antitrust laws, has said that it is seeking to determine whether certain individuals at GLG Life Tech acted illegally by allegedly keeping quiet about certain details of the company’s activities.
The Vancouver-based company said in a statement on Wednesday that it was aware of the reported investigation, and denied the allegations, but said it had not received any contact or communication from the law firm.
“The company has reviewed the reported allegations and believes they are without merit and stands behind its continuous public disclosure record. GLG believes that there is no basis for any claim to proceed. If, however, a claim proceeds, GLG will defend itself vigorously,” it said.
On Wednesday, shares in GLG fell 26.7% to a new 52-week low of C$0.87 before recovering slightly to C$0.89.
In particular, Faruqi & Faruqi said the investigation focuses on allegations that GLG did not disclose that it experienced production problems during 2011, experienced “weaker demand for its products than the company led investors to expect”, and that the company’s supply agreement with Cargill was being renegotiated.
Shares in GLG plummeted 30% on the Toronto stock exchange in early October, after the company warned that its revenue would likely be hit by lower than expected demand from consumers in China for its Chinese beverages, which it sells through AN0C, a China-based subsidiary company, as well as production problems at two Chinese bottling plants.
And on November 14, shares fell 26% after the company reported that sales had fallen 92% during the third quarter and said it had renegotiated its 10-year supply agreement with Cargill – its biggest stevia customer – meaning that Cargill would no longer be obliged to purchase 80% of its stevia supply from GLG.