Robbins Arroyo LLP: MGT Capital Investments, Inc. (MGT) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against MGT Capital Investments, Inc. (NYSE MKT: MGT) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of MGT securities between May 9, 2016 and September 20, 2016, for alleged violations of the Securities Exchange Act of 1934 by MGT’s officers and directors. MGT, together with its subsidiaries, acquires, develops, and monetizes assets in the online, mobile, and casino gaming space.
MGT Accused of Failing to Disclose Risks of Listing Its Stock on the New York Stock Exchange (“NYSE”)
According to the complaint, on May 9, 2016, MGT announced that it was acquiring the assets of an internet security startup known as D-Vasive, Inc. Under the terms of the acquisition, MGT would purchase D-Vasive for $300,000 and 23.8 million shares of newly-issued MGT stock, and cyber security pioneer and founder of D-Vasive’s controlling entity John McAfee would become the Executive Chairman and Chief Executive Officer of MGT. MGT further elaborated, “With the acquisition of D-Vasive technology as a starting point, we expect to grow MGT into a successful and major force in the space.” MGT subsequently announced that it would also acquire Demonsaw LLC, agreeing to issue another 20 million shares of its common stock to acquire Demonsaw. As a result, MGT’s stock price surged more than 1,200% in the month following these announcements.
However, the complaint alleges that MGT officials failed to disclose the risks associated with listing new shares on the NYSE and that MGT was under inquiry by the U.S. Securities and Exchange Commission (“SEC”). On September 19, 2016, MGT revealed that it had received a subpoena from the SEC days earlier which requested certain undisclosed information. Then, on September 20, 2016, MGT disclosed that the NYSE was refusing to list the 43.8 million shares of MGT required to complete the acquisitions. On this news, MGT stock fell 42%, closing at $1.89 per share on September 20, 2016.
MGT Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.
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