A securities class action lawsuit was recently filed against the manufacturing and security firm Global Digital Solutions, Inc., that alleged a series of misleading statements and failure to disclose certain details about its operation.
The suit was brought due to allegations that the company fabricated a deal in late 2013 that it claimed to have made with Airtronic USA, Inc., and did not remove misleading statements from its website despite repeated requests from Airtronic to do so. The suit has a class period from Oct. 8, 2013 through Aug. 12, 2016, and seeks to recover damages from Global Digital as a result of its alleged misdeeds.
Two suits filed in a week
In addition to the above allegations, the class action also claims that Global Digital’s 2014 revenue projections didn’t have much of a reasonable basis, and that the firm didn’t have the financing in place to acquire other companies, despite repeated and unsolicited offers to do so. One such business, Remington Outdoor Company, Inc., repeatedly told the Global Digital that it was not interested in being acquired, but continued to receive offers regarding such a transaction anyway. And because of all these issues, Global Digital’s statements about its ongoing prospects for future success and current operations “were materially false and misleading and/or lacked a reasonable basis at all relevant times.”
The suit came not long after the U.S. Securities and Exchange Commission itself filed a lawsuit in U.S. District Court for the Southern District of Florida against Global Digital and two of its executives, according to Daily Business Review. That separate suit alleged that Global Digital made up a pending $95 million merger with a company that made grenade launchers, and had in 2013 projected as much as $75 million in revenues for the first quarter of 2014. In reality, Global Digital “operated out of a virtual office with $509,224 in cash and a $1.4 million note receivable.”
Other details of the company
Global Digital was also briefly in the news a few years ago because of an association with former U.S. Senator Scott Brown, according to the Boston Globe. Brown, who served as the junior Senator from Massachusetts from 2010 to 2013, joined Global Digital in an advisory role, but resigned several months later when the subject of that company came up during a separate Senate race in New Hampshire. Brown has not been named in any of the suits in question. The SEC’s suit seeks to bar both CFO David Loppert and CEO and chairman Richard Sullivan from participating in future penny stock offerings.
When the Globe first reported on Brown’s involvement with the company, and the fact many of its statements may have been misleading, Global Digital’s stock was trading at around 46 cents per share, according to Google Finance. Its recent all-time high came in Aug. 2013, when it was north of $1. However, after the Globe’s reporting, that number dipped precipitously, falling to less than 9 cents per share by the end of 2014. Today, it sits at less than a penny a share.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or firstname.lastname@example.org.