In a regulatory filing last Friday, CD Projekt SA, the parent company of CD Projekt RED, announced they have received word of a second class action lawsuit filed against them for securities violations.
The second suit filed in the Central District of California federal court appears to be from an individual named River Hain. While it is different from the lawsuit filed on Christmas Eve by the Rosen Law Firm, the allegations are substantively similar. It accuses CD Projekt SA of deliberately misleading shareholders regarding the final year of development on Cyberpunk 2077 and the game’s disastrous launch. The assertion is that the board’s poor supervision is tantamount to omission of and or misrepresentation of fact, and the sharp drop in the company’s stock price is entirely their fault. The amount of damages sought has not been declared as of yet.
This suit comes shortly after Marcin Iwinski’s recent apology on Twitter. As of right now, in addition to the two class action suits, a Polish law firm headed by one Mikołaj Orzechowski has stated they are contemplating a lawsuit against the company under Polish securities laws. The Office of Competition and Consumer Protection, a Polish government agency, is also investigating the company.
CD Projekt SA’s filing concludes with the terse statement, “The Company will undertake vigorous action to defend itself against any such claims.”
Food For Thought
Why a second suit was filed rather than the individual joining the Rosen suit is unknown. As a procedural matter, the lawsuits stand a good chance of being combined into a single case, particularly since they are essentially alleging the same actions by CD Projekt SA. It is, however, possible that one legal team might resist combining the cases on the theory that they can get a better award than the other guys. Whatever procedural maneuvers may happen, CD Projekt SA is likely facing an uphill battle.