Logistics software company GetSwift (ASX: GSW) is facing a class action from shareholders over allegations it has engaged in misleading and deceptive conduct and two other legal firms are also considering launching a class action.
Law firm Squire Patton Boggs has applied to commence the action in the Federal Court, while litigation funder Vannin Capital together with law firm Corrs Chambers Westgarth along with MC Lawyers have said they are also investigating the possibility of launching a class action.
The class action from Squire Patton Boggs alleges continuous disclosure breaches and misleading and deceptive conduct, and is seeking damages.
It is alleged GetSwift breached its obligations to the market in announcing deals with The Fruitbox Company, the Commonwealth Bank, Fantastic Furniture and NA Williams, with those deals subsequently either cancelled or subject to ongoing review.
"It is alleged that the exaggerated announcements caused investors to believe that GetSwift had actually secured and commenced generating revenue from substantial clients such as FruitBox, CBA and Fantastic Furniture," Squire Patton Boggs says in a statement.
"Following contract announcements, GetSwift shares increased to a peak share price of $4.60 in December 2017, at which time it had a market capitalisation exceeding $598 million.
"Since then it was revealed that at least two of the contracts did not survive a trial period at all, and one had not started its trial the market capitalisation has declined to less than half this amount."
GetSwift announced to the ASX that it will contest the class action from Squire Patton Boggs.
Shares in GetSwift were pummelled by more than 50 per cent on Monday after the company came out of a near month-long trading halt as it faced ASX enquiries about media reports it breached its continuous disclosure obligations on several occasions.
At the market open on Monday, GSW shares plunged 57 per cent from $2.92 to $1.25 as investors sold out of the stock following a turbulent period for the logistics software company.GetSwift had been in a trading halt since January 22 and requested the suspension of share trading.
A Fairfax media report which was headlined 'GetSwift: Too Fast For Its Good' claimed that in addition to not disclosing the loss of two contracts, the company had released revenue forecasts prematurely from a deal it announced with the Commonwealth Bank of Australia, with CBA saying the GetSwift software was not yet in pilot phase.A month-long investigation by the ASX found GetSwift did not breach its continuous disclosure obligations.
The company says it has been working with PricewaterhouseCoopers (PwC) to review its compliance procedures.In December, GetSwift, which is run by executive chairman Bane Hunter (pictured left) and former AFL player and entrepreneur Joel McDonald, closed one of the biggest tech raises in 2017, securing an oversubscribed placement of $75 million in new capital.
The capital raising included strong support from existing investors, as well as new Australian and American institutional investors.In December 2016, its IPO was launched at $0.20 a share. Its shares soared tenfold in 2017 before dropping from $4.60 to the current price of $1.25.
Earlier this month, GetSwift announced its newest director had resigned from the board after just two months.Nevash Pillay was the subject of an ASX query in late January to GetSwift regarding a late submission to a change of director's interest notice as the company's two-week trading halt continues while it addresses concerns about its disclosure obligations and compliance with listing rules.
Ms Pillay was on the GetSwift board when it raised $75 million at $4 a share in December.
Business News Australia
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