The lawsuit was filed by Federman & Sherwood in the United States District Court for the Eastern District of Pennsylvania. It represents entities that purchased Evolution shares between 14 February 2019 and 25 October 2023 – known as the class period. The complaint alleges that Evolution made untrue or misleading statements regarding its growth potential, customer compliance, company compliance, and the impact of non-compliance on revenue. Defendants named in the suit include Martin Carlesund, Evolution CEO, and Jacob Kaplan, CFO.
The complaint lists incidents that occurred between 24 January 2022 and 26 October 2023, which had subsequent effects on Evolution’s share prices. It claims that these incidents serve as proof of Evolution’s non-compliance. Specifically, the lawsuit alleges violations of Section 10(b) of the Securities Exchange Act and Rules 10b-5, as well as violations of Section 20(a) of the Securities Exchange Act. These sections prohibit attempts to defraud investors through false statements or omitting facts.
The lawsuit aims to recover damages from all investors who purchased securities during the class action period.
What does the lawsuit outline?
- On 24 January 2022, a report from Analyst Generation Limited alleged that a portion of Evolution’s revenue could be at risk due to future regulatory clampdowns and exposed the company to revenues from illegal gambling activities. Following this report, Evolution’s American Depository Shares (ADS) fell by 14.68% over the next three trading sessions;
- On 26 April 2022, Australia’s gambling regulator called for the blocking of six online gambling sites for alleged illegal gambling, and five of these sites were customers of Evolution; Evolution’s ADS fell by 6.22% across the next two trading sessions;
- Evolution’s Q1 2023 and Q3 2023 results showed stagnation in its RNG business segment and minimal growth in its North American business. In an earnings call related to Q3 results, Evolution disclosed delays in opening new studios. Following these Q1 and Q3 results, Evolution’s ADS price fell by 8.23% over the next four trading sessions and 7.61% over the next two, respectively.
Evolution has not provided a response to the allegations.
