LOOP Class Action Lawsuit Alleges Investors Were Duped

LOOP Canada Industries Inc. and related parties were hit with an application for authorization of a class action lawsuit alleging LOOP duped investors by overstating its technological capabilities, causing investors to sustain financial losses.

LOOP, which is based in Terrebonne, allegedly claimed that it had created a method of recycling that could purportedly break down “PET” plastic and produce “industrial grade purity” base chemicals from PET. The class action lawsuit asserts that those claims are false.

News Reports Reveal Misrepresentations by LOOP

On Oct. 13, reports were published by several media outlets indicating that LOOP had misrepresented its technological capabilities.

One article published in Business Insider pointed to a report by Hindenburg Research which allegedly found that LOOP’s plastic recycling technology did not work.

Citing the Business Insider article, the LOOP Canada class action lawsuit says that the Hindenburg report essentially determined that LOOP “claims to have discovered how to turn worthless trash into pure gold, a feat that multi-billion chemical companies such as DuPont, Dow Chemical, and 3M have been unable to achieve on a large scale despite years of efforts.”

Further, Hindenburg reportedly found that LOOP never generated revenue despite claiming that it had a “proven” solution that is “leading the sustainable plastic revolution.” As part of its investigation, Hindenburg Research reportedly reviewed extensive company documentation, litigation reports, and conducted interviews with former employees, competitors, industry experts and LOOP’s company partners.

Report: LOOP Business Model is “Smoke and Mirrors”

The Hindenburg report determined that LOOP is “smoke and mirrors with no viable technology,” according to the LOOP Canada class action lawsuit.

The Hindenburg report found that the company operated two labs. The first, which was reportedly responsible for attaining incredible results, included the company’s two lead scientists, both brothers, and their father. The second LOOP lab was staffed by employees who could not replicate these results.

The two brothers reportedly invented the company’s recycling process. However, the LOOP class action claims both do not any have post-graduate education in chemistry and no other documented work experience.

LOOP’s scientists were allegedly pressured by the company’s CEO to lie about the results of LOOP’s process. A former employee told Hindenburg Research that claims that the company could break down PET to its base chemicals at a 100% recovery rate were “technically and industrially impossible,” and that LOOP falsely claimed it could “industrial grade purity” base chemicals from PET.

Additionally, LOOP’s CEO reportedly hired a convict who had pleaded guilty to stock manipulation to help raise startup capital for LOOP, and this convict reportedly introduced the CEO to another convict who facilitated the company’s first investment.

LOOP’s CEO allegedly does not have a formal science education; however, Hindenburg reports that he previously engaged in stock promotion at another publicly traded company that subsequently collapsed.

The Hindenburg researchers contacted some of LOOP’s partners, who refused to comment about whether any plastic had been recycled in partnership with LOOP or whether they had purchased any PET from the company.

“We suspect these partnerships have gone nowhere,” the Hindenburg report states before concluding that LOOP is unlikely to generate meaningful revenue.

The Hindenburg report also notes that its findings have been submitted to regulators.

Plaintiff Says He’s Not the Only One Duped by LOOP

Plaintiff Levy (first name redacted from the court documents) says he purchased 300 shares of LOOP for US$10.15 per share (plus a $9.99 commission) on June 18, 2018. He paid a total of $3,054.99 USD for this transaction.

After the Hindenburg Report was released on Oct. 13, LOOP’s share price reportedly dropped by 39%.

“At the time of writing, [Levy’s] 300 LOOP shares are now worth only $2,304.00 USD,” the LOOP Canada class action lawsuit alleges.

“At the time of his purchase, [Levy] was unaware that LOOP had made misrepresentations, fabricated its business model and lied to the public and shareholders,” Levy says in the class action lawsuit.

He filed the class action lawsuit on behalf of himself and a proposed Class of all persons and entities who acquired LOOP securities during the Class Period. The Class Period is not defined in the court document.

Levy says that he and the other putative Class Members were harmed by LOOP’s unlawful conduct. He estimates that there are likely tens of thousands of Class Members and that they are entitled to damages in an amount to be determined.

What do you think about the LOOP Canada class action lawsuit? Tell us your thoughts in the comment section below! 

Levy is represented by Mtre Joey Zukran of LPC Avocat Inc.

The LOOP Inflated Trading Class Action Lawsuit is Levy v. LOOP Industries Inc., et al., Case No. 700-06-000012-205, in Quebec Superior Court, District of Saint-Jérôme, Canada.

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