Shares in Creso Pharma Ltd (ASX: CPH) continue to take a battering today. At the time of writing, shares in the cannabinoid company are down 7% at 9.3 cents, having come off a 3-month high of 15 cents just 2 weeks earlier.
Investors are punishing Creso on the back of its chairman's probe from ASIC. Today the company notes that on 22 November 2021, it was served with a notice by ASIC requiring it to produce certain documents in connection with an investigation.
Just a week earlier, when the scandal unfolded, Creso advised that it hadn't been served any papers from ASIC at the time.
Let's see what's changed.
Image source: Getty Images
What's Creso Pharma caught up in?
The watchdog's notice "identified for the first time that ASIC's investigation includes suspected contraventions by the Company, its officers, agents, employees and representatives in relation to trading in its securities", Creso says.
Creso stresses that "it should not be construed as an indication by ASIC that a contravention of the law has occurred, nor should it be considered a reflection upon any person or entity", as reported by ASIC itself.
The company became involved in ASIC's investigation because of "common directorships" of its chairman Adam Blumenthal, who is also a director at EverBlu Capital.
Blumenthal has today stood aside from his role as chairman of Creso Pharma, to distance its "operations and governance from the ASIC investigation".
Another executive director, Dr James Ellingford, will jump in as interim chairman of the company until a solution is arrived at. The board has also has established a standalone subcommittee to help assist with the investigation.
Investors continue driving in the pain following the announcement, with the selling pressure on Creso's share price occurring at a volume of 90% of its 4-week trading volume.
What's the impact going forward?
According to Creso, not much. It reckons it has taken the necessary steps to comply with the matter and has offered its assistance in the investigation.
Hence, it is business as usual for the cannabinoid player, according to the release. Commenting specifically on its impact, the company added:
Importantly, the existence of the ASIC investigation does not impact on Creso Pharma's ability to continue to operate efficiently. The Company notes that its key business operations in Canada and Switzerland are each managed by in-country senior executives who have been quarantined from this matter and, as such, those operations remain unaffected and are operating as usual. The Company appreciates and is grateful for the continued support of all of its stakeholders.
Investors have been leaving the Creso Pharma party for the last 2 weeks since the news was announced. In the last week alone, shares have lost another 15%, and are now down 48% since January 1.
Despite the turbulence, Creso shares are still up 200% for the year.
