Following the global financial crisis that triggered the collapse of the Silicon Valley Bank (SVB) and the consequent liquidity problem of Credit Suisse, stocks and shares in much of the United States and Europe fell sharply. The papers of the Uruguayan unicorn dLocalwhich is listed on the New York Stock Exchange, fell 8.18% from this week’s peak.
This Thursday, the firm’s titles closed the trading day in $14.3 each one, which meant a decrease of 4.93% compared to the previous closing. But if you take into account the weekly peak it had reached around noon on Tuesday, the decline was more than 8 percentage points.
The Uruguayan company, in turn, had just fallen a 6.77% –which he later traced– after a class action lawsuit of a United States law firm before the Supreme Court of that country due to the same situation in which its shares plummeted 50.71% in November last year after learning of the lapidary report by Muddy Waters Capital.
What is the class action lawsuit against dLocal about?
The presentation before the highest US court of justice was made by the law firm Bragar, Eagel and Squire PC The firm called on all investors who have acquired securities of the company in its 2021 IPO to contact before May to obtain more information on the claim.
In a public statement, the law firm accused the Uruguayan company of incorporating “false statements of material facts” and omit many others in their financial reports.
In June 2021, more than 33.8 million shares at US$21.00 eachaccording to the document, which recalls that the registration statement “repeatedly promotes dLocal’s alleged ‘increasing and deepening relationships’ with new and existing global business customers,” and “tells potential investors that dLocal measures its success by its performance in terms of total payout volume.”
According to Bragar, Eagel and Squire PC, the company “offers historical POS data” to justify its narrative that it has a “solid track record”. In addition, in the registration statement, the Uruguayan unicorn warns that “a plan is being implemented to improve internal controls in the financial reports”.
Still, consistent with Muddy Waters Capital’s report last November, the law firm argued that in these documents, the company misrepresented the POS “derived from new merchants in 2019 and 2020 from dLocal that, at the time of the initial public offering, were well below what the registration statement reported.”
Meanwhile, Bragar, Eagel and Squire PC recalled in their statement that, when “the truth about the POS and internal controls” became known, their shares plummeted by more than 50%, causing investors to lose “hundreds of millions of dollars.”
In what situation does the global crisis find the Uruguayan financial system?
The collapse of SVB took the financial universe around the world by surprise. In Uruguay, the banking system appears robust and with a excellent liquidity situation.
The specialists do not foresee immediate repercussions product of the global financial crisis and, furthermore, they hope that calm will return in the coming days in the United States, given that there is very strong deposit insurance there and the Fed’s response has been appropriate.
The last statement of Financial Stability Committee -made up of the Central Bank of Uruguay (BCU), the Corporation for the Protection of Bank Savings and the Ministry of Economy and Finance-, assured last December that the domestic financial system is stable and in a position to face the challenges presented by an international panorama loaded with uncertainty.
Source: Ambito
