TMC the metals company Inc.
TMC the metals company Inc. (“TMC” or the “Company”), formerly known as Sustainable Opportunities Acquisition Corp., is a deep-sea minerals exploration company that specializes in collecting and processing polymetallic nodules from the seafloor of the Pacific Ocean.
On September 13, 2021, Bloomberg published an article revealing that two investors had failed to provide $330 million as part of the private investment in public equity (“PIPE”) component of TMC’s go-public deal. The article also questioned TMC’s “green credentials,” revealing that “[e]nvironmentalists claim that TMC’s activities will damage sensitive ecosystems and destroy vital biodiversity” and that “[s]ince the SPAC deal was announced in March, more than 500 scientists have signed a letter calling for a moratorium on deep-sea mining until the environmental risks are better understood.”
On this news, TMC’s shares fell $2.45, or over 20%, over the next two trading days to close at $10.00 on September 15, 2021, damaging investors.
Then, on October 6, 2021, before markets opened, market researcher Bonitas Research released a report alleging multiple issues plaguing TMC. The report alleged: (1) TMC had overpaid on licenses to potential undisclosed insiders; (2) TMC artificially inflated exploration expenses in order to mislead investors about the scale of its operations; (3) there are reasons to question TMC’s ownership claim of one of its exploration licenses; and (4) a history of affiliating with bad actors.
On this news, TMC share prices dropped $0.32, or over 7%, to close at $4.14 on October 6, 2021, damaging investors.
A securities class action has been filed against TMC on behalf of shareholders that purchased TMC shares between March 4, 2021 and October 5, 2021. This case has been filed in the U.S. District Court for the Eastern District of New York.
According to the lawsuit, defendants throughout the Class Period made false and/or misleading statements and/or failed to disclose: (1) the Company had significantly overpaid to acquire Tonga Offshore Mining Limited (“TOML”) to undisclosed insiders; (2) the Company had artificially inflated its Nauru Ocean Resources Inc. (“NORI”) exploration expenditures to give investors a false scale of its operations; (3) the Company’s purported 100% interest in NORI was questionable given prior disclosures to the International Seabed Authority (“ISA” or the “Authority”) that NORI was wholly owned by two Nauruan foundations and that all future income from NORI would be used in Nauru; (4) defendants had significantly downplayed the environmental risks of deep-sea mining polymetallic nodules and failed to adequately warn investors of the regulatory risks faced by the Company’s environmentally risky exploitation plans; (5) the Company’s PIPE financing was not fully committed and, therefore, the Company would not have the cash necessary for large sale commercial production; (6) as a result of the foregoing, the Company’s valuation was significantly less than defendants disclosed to investors; and (7) as a result, defendants’ public statements were materially false and/or misleading at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
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