A collective legal action has been lodged against Evolution by consumer advocates and class action law firm Federman & Sherwood. According to the suit, Evolution misled its investors about its growth prospects and its adherence to US law, which negatively affected its income and expansion. The legal action spans the period from 14 February 2019 to 26 October 2023 and seeks reparations on behalf of investors who bought Evolution shares.
Evolution Under Increasing Strain
Regulatory obstacles have besieged Evolution, including accusations of violating U.S. sanctions and operating in countries that the U.S. has topped from their list. In November 2021, the company was indicted for running illegal operations in certain markets, causing a sharp fall in its stock price. A January 2022 analysis report hinted that a considerable portion of Evolution’s revenue could be jeopardized by impending regulatory crackdowns.
In April 2022, Australia’s gambling regulator asked ISPs to restrict unlicensed online gambling websites, five of them being Evolution customers. This led to a fall in Evolution’s share value. The Administrative Court of Sweden affirmed a record penalty on an Evolution customer, ComeOne Group, which saw an 11% plummet in shares. Lobbying efforts by industry bodies against the proposed overhauling of UK’s gambling laws also negatively impacted Evolution’s shares.
Evolution’s financial statements revealed various internal challenges, with stagnant performance in North America and overall growth flatlining, resulting in a collapse in the share price. Evolution encountered additional difficulties in October 2023, as it suffered setbacks in launching new studios, raising questions about the company’s long-term outlook.
Plaintiff Claiming Evolution Withheld Information
The complaint from Federman & Sherwood alleges infringements of Section 10(b) and breaches of Section 20(a) of the Securities Exchange Act. It alleges that between 24 January 2022 and 26 October 2023, various disclosures uncovered the truth about Evolution’s regulatory observance, revenue, and growth, causing a substantial stock price fall.
“The Complaint alleges that Defendants… made materially false and/or misleading statements concerning Evolution’s conformance with the law and growth plans.”
Federman & Sherwood statement
The suite lists Evolution CEO Martin Carlesund and CFO Jacob Kaplan as defendants. Should it be proven that the company deliberately obscured its mounting regulatory and compliance problems, it could face significant long-term consequences. As of now, Evolution has not offered a response to the allegations, presumably reserving its resources for the forthcoming court proceedings.
Federman & Sherwood has established a cut-off date of 26 March 2024, for investors wanting to join the legal proceedings against Evolution. The class action lawsuit highlights Evolution’s struggles in sustaining regulatory adherence. The ensuing effects on its financial stature and its value to shareholders could draw more focus on the sector in its entirety.
