Investors filed a class action lawsuit against cannabis online marketplace WM Technology Inc. (NASDAQ: MAPS), better known as Weedmaps, citing the company’s misleading and false statements.
Misleading statements
In September, Green Market Report wrote that Weedmaps agreed to pay the Securities and Exchange Commission (SEC) $1.5 million to settle claims about misleading investors on the company’s metrics. The SEC charged that Weemaps executives padded the user stats to bolster the company’s apparent performance to investors.
“WM Technology misleadingly reported substantial and continued MAU growth and emphasized the strength and growth of its user base in its public filings and earnings calls,” the SEC charged. “These purportedly ‘active’ users did not volitionally seek out the WM Technology site, and, in most instances, they took no action whatsoever on the site. Despite the reported growth in MAU, WM Technology’s user engagement metrics were stagnant or declining.”
The SEC said that the company’s former CEO Chris Beals and former CFO Arden Lee both misled securities regulators and investors on the strength of its MAU numbers and the fact that the supposedly growing metric included supposed site visitors who were redirected to Weedmaps.com from pop-up ads on other websites, the SEC said. The day after the SEC announced that the company settled, it announced that Beals and Lee each agreed to pay a fine of $175,000.
See the filed docs at the link
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