Spruce Point Capital Management, an investment firm specialising in short selling, has published a report concerning the Montreal-based company and its alleged issues.
In it, the short seller details Nuvei’s history, focusing on its relationships with individuals connected to “major Ponzi schemes and fraudulent activities”, while also singling out key executives, in particular its CEO and Founder Philip Fayer.
Nuvei struck back, calling Spruce Point’s report “misleading”, claiming it “draws inaccurate conclusions, innuendo and character attacks on key executives”.
The short seller’s concerns, according to Nuvei, derive primarily from its desire to profit from a decline in the company’s stock price, at the expense of Nuvei’s shareholders, customers and employees.
It said: “The personal attacks on Nuvei executives made by the short seller appear to have been made to distract from the company’s achievements and progress.”
And Nuvei’s stock price has indeed dropped since Tuesday 7 December, when it closed at CA$122.73 (US$96.74).
Following the publication of Spruce Point’s report on Wednesday 8 December, this fell to CA$60.53. While Nuvei’s stock price has since recovered slightly, rising to CA$73.12, it remains 40% lower than it was prior to Spruce Point’s allegations.
Furthermore, based on the short seller’s claim that Nuvei published inaccurate growth figures, two legal firms have since launched investigations regarding potential class-action lawsuits.
The Law Offices of Frank R. Cruz and the Law Offices of Howard G. Smith are both pursuing preliminary inquiries on behalf of investors.
Nuvei meanwhile reiterated its positive outlook and urged investors to ignore Spruce Point’s claims, saying: “Nuvei remains focused on executing against its strategy. Investors are encouraged to read the company’s financial results for the third quarter ended September 30.
“The company urges investors to not make decisions based on the short seller report and to review public filings for material information that pertains to its business.”
