A consumer and class action lawsuit has been filed against Evolution by Federman & Sherwood, specialists in this field. The lawsuit alleges that Evolution misled investors about its growth trajectory and compliance with US law, ultimately undermining its revenue and growth. The lawsuit covers the period from February 14, 2019, to October 26, 2023, and seeks to recover damages on behalf of investors who purchased Evolution securities.
The company faced various regulatory challenges, including allegations of breaching US sanctions and operating in countries blacklisted by the US. In November 2021, the company was accused of conducting business illegally in several markets, leading to a substantial decline in its share price. An analyst report in January 2022 suggested that a significant portion of Evolution’s revenue could be at risk due to potential regulatory clampdowns.
In April 2022, Australia’s gambling regulator requested ISPs to block unlicensed online gambling sites, five of which were Evolution customers, resulting in a decline in the company’s share price. The Swedish Administrative Court upheld a record fine on an Evolution customer, ComeOne Group, resulting in an 11% drop in shares. Reports of industry entities lobbying against the UK’s planned gambling laws overhaul also impacted Evolution’s shares.
Evolution’s financial reports revealed underlying challenges, including stagnant North American performance and flatlined overall growth, leading to share price declines. In October 2023, the company experienced delays in opening new studios, raising concerns regarding its long-term prospects.
The lawsuit alleges violations of the Securities Exchange Act and breaches of securities laws. The complaint claims that between January 24, 2022, and October 26, 2023, various disclosures revealed the truth about Evolution’s compliance, revenue, and growth, leading to a significant share price drop.
The lawsuit names Martin Carlesund, Evolution CEO, and Jacob Kaplan, chief financial officer, as defendants. If the company did obscure its growing regulatory and compliance issues, it could have significant long-term repercussions. Evolution has not yet responded to the allegations.
Federman & Sherwood has set a deadline of March 26, 2024, for investors wishing to participate in the legal action against Evolution. The class action lawsuit sheds light on Evolution’s challenges in maintaining regulatory compliance, and the subsequent impact on its financial performance and shareholder value could draw increased scrutiny on the sector as a whole.