Grabar Law Office is investigating claims on behalf of shareholders of Paysign, Inc., a card payment solutions provider and an integrated payment processor.

A federal court has allowed a class action to proceed in which it is alleged that certain of Paysign’s officers made materially false and misleading statements to the public. The court found that the complaint alleges facts that, if true, constitute strong circumstantial evidence that certain officers engaged in at least two acts of misconduct including that: (1) Defendants employed a suspended accountant, Arthur De Joya, despite an SEC cease-and-desist order prohibiting De Joya from practicing as an accountant; and (2) Defendants Newcomer and Spence engaged in insider trading when they sold portions of their total stock holdings in Paysign while stock prices were artificially inflated.

Specifically, it is alleged that “in the Company’s Annual Report filed . . . on March 12, 2019, the Defendants misleadingly claimed that their failure to (a) retain highly skilled personnel in finance may harm the Company’s operations, (b) maintain internal controls to prevent additional deficiencies may result in the untimely filing of the Company’s financial statements, and (c) prevent “improper operations” or other events may harm the Company’s business or reputation. However, every one of these events was not contingent because they had already occurred before or during the Class Period.”

On March 16, 2020, Paysign announced delaying filing their 2019 annual report because of deficiencies “in its internal controls over financial reporting and information technology general controls.” As a result, Paysign’s stock declined 17% from the previous day’s closing price. On March 31, 2020, Paysign announced delaying their earnings results. Paysign’s stock then declined 22% from the previous day’s closing price.

It is alleged that Defendants Newcomer, Attinger, and Spence knew of these internal control deficiencies and the harm these deficiencies would cause. Defendants Newcomer and Spence purportedly exploited this knowledge and sold stock they held in Paysign while the stock price was artificially inflated.

Paysign shareholders who have held Company stock since on or about March 12, 2019, can seek corporate reforms, the return of funds spent defending litigation back to the company, and a court approved incentive award at no cost to them whatsoever.

If you would like to learn more about this matter, you are encouraged to contact us at jgrabar@grabarlaw.com, or call 267-507-6085.