Jacob Securities, a defunct Toronto investment broker, is suing THC BioMed Intl. Ltd., a publicly traded Kelowna, British Columbia medical cannabis cultivator, claiming that the company breached a deal by giving them photocopied – and worthless – share certificates, according to a Vancouver Sun report.
The lawsuit stems from the settlement of a separate court case between the two companies in Sept. 2015, in which THC agreed to deliver 4,660,000 common shares to Jacob. According to the report, THC delivered photocopies of the shares which “cannot be traded and have no value.” Nine months later Jacob realized the certificates were photocopies, filing the claim against the firm in October.
In a November court filing, THC said that the original settlement deal was entered into due to Jacob’s “false pretenses, fundamental misrepresentations and omissions.” The biomedical firm has hired Jacob to secure equity financing and publish a research report.
Meanwhile, Jacob had come under fire by the Investment Industry Regulatory Organization of Canada, who suspended the firm in Dec. 2015 over their failure to acquire the proper registration approvals prior to announcing the launch of the Jacob Capital Management Cannabis Fund.
In their suspension decision, the IIRO indicated their decision was due to the resignation of the chief financial officer and that Jacob, “was locked out of its business premises due to its failure to pay rent of approximately $110,000.”
“…Apparently, unsupervised trading continued by (Jacob’s) registered representatives through their mobile phones and by meeting with clients in the lobby of the building,” the agency said in the decision.
“[If THC had] been aware of the true status of (Jacob) with its regulatory authority, they would not have entered into the settlement agreement,” THC said in the filing.
The new allegations have not yet been tested in court.