RenovaCare Inc., a biotechnology firm, has agreed to a $2 million deal to settle a class action lawsuit accusing the company of inflating its stock prices through a covert paid promotional campaign. The agreement was submitted for preliminary approval to a New Jersey federal judge, according to court filings on Monday.
Investors Seek Approval for Settlement
RenovaCare investors Diana Deidan and Marc Jay Gannon filed the motion in Newark federal court, requesting U.S. District Judge Brian R. Martinotti to approve the $2 million settlement. The investors explained that the settlement represents roughly 7% of the maximum damages they could have won at trial. Despite the modest percentage, they deemed it a strong recovery, particularly considering the risks of achieving a smaller payout—or none at all.
“This is an excellent recovery, especially when factoring in the potential risk of no recovery at all, which is common in securities class actions,” the investors stated in their filing.
RenovaCare $2M Deal : Allegations of Stock Pumping
The lawsuit accused RenovaCare, a company with no revenue or commercialized products, of secretly funding a promotional campaign to inflate its stock prices. The campaign was allegedly carried out by StreetAuthority, an online financial publishing firm, and its owner Lou Betancourt, who were paid to produce favorable reports on the company.
