Activist Investor Informs MindMed of Financial Misstatements, Questions Internal Controls
November 14 2022 - 08:08AM
GlobeNewswire Inc.
Today, FCM MM HOLDINGS, LLC (“FCM”) announces that it has sent a
letter (the “Letter”) to the Board of Directors (the “Board”) of
Mind Medicine (MindMed) Inc. (NASDAQ:MNMD) (“MindMed”, the
“Company”). On November 10, 2022, MindMed filed with the Securities
and Exchange Commission (the “SEC”) form 10-Q for quarter three of
2022 (the “ER”). The Letter focuses on false statements made by
MindMed in the ER whereby MindMed, among other errors,
underreported last years related party transactions (regarding
legal fees) by over one and a half million dollars despite
statements in the ER “that [MindMed’s] disclosure controls and
procedures were effective at a reasonable assurance level as of
September 30, 2022.” The false statement about related party
transactions comes as MindMed has been embroiled in allegations of
self-dealing and securities fraud. The Letter questions whether
MindMed is engaging in activities to hide or otherwise mislead
investors that MindMed’s previous outside counsel had a conflict of
interest in protecting MindMed’s intellectual property and other
assets.
The Letter probes whether MindMed’s internal
controls are adequate to ensure that MindMed accurately reports
financial results considering Ernst & Young’s disclosure that
the Company had a material weakness in its internal controls under
Sarbanes-Oxley in FY 2021. Subsequently, MindMed terminated Ernst
& Young after reporting the material weakness.
The Letter also notes that, concurrent to the
accounting errors, MindMed’s management received an employment
package where they would receive significant benefits in the event
of resignation or termination (the “Golden Parachute”).
“It is abhorrent that the Board believes that it
is more important to ensure management has golden parachutes rather
than performing the most basic oversight on MindMed’s filings,”
said FCM’s Chief Executive Manager Jake Freeman.
A copy of the Letter is available at:
https://mindmed.zone/board-letter-11-14-2022
To stay informed as to the latest developments,
FCM encourages MindMed stakeholders to sign up for its newsletter
at: https://mindmed.zone/signup
About FCM
FCM is managed by Mr. Jake Freeman and
represents an investment of 4.9% of MindMed's shares outstanding.
FCM seeks to implement its Value Enhancement Plan detailed in its
letter to Ms. Carol Vallone dated August 11, 2022. The Value
Enhancement Plan seeks to refocus MindMed on its core drugs,
drastically cut spending, and significantly decrease shareholder
dilution. Despite the controversy, FCM has not reduced its stake in
MindMed.
FCM additionally represents other early
investors in MindMed, who all have a strong interest in seeing the
long-term success of MindMed.
For additional disclosures relating to public
broadcast solicitations please see mindmed.zone/disclosure or read
the disclosure herein.
Media ContactJake FreemanChief
Executive ManagerFCM MM HOLDINGS, LLC30 N Gould St. Ste RSheridan,
WY 82801Phone: 908-308-2381Email: jake@mindmed.zone
Disclosures
The information contained in this press release
does not and is not meant to constitute a solicitation of a proxy
within the meaning of applicable securities laws. FCM has not
requisitioned a meeting of shareholders to reconsider its
proposals, there is currently no record or meeting date set for a
shareholders’ meeting and shareholders are not being asked at this
time to execute a proxy in favour of FCM. In connection with any
future shareholders’ meeting, FCM may file a dissident information
circular in due course in compliance with applicable securities
laws. Notwithstanding the foregoing, FCM is voluntarily providing
the disclosure required under section 9.2(4) of National Instrument
51-102 – Continuous Disclosure Obligations applicable to public
broadcast solicitations. The information contained herein, and any
solicitation made by FCM in advance of a future shareholders’
meeting is, or will be, as applicable, made by FCM and not by or on
behalf of the management of the Company. All costs incurred for any
solicitation will be borne by FCM, provided that, subject to
applicable law, FCM may in certain circumstances seek reimbursement
from the Company of FCM’s out-of-pocket expenses, including proxy
solicitation expenses and legal fees, incurred in connection with a
new meeting. FCM is not soliciting proxies in connection with a
shareholders’ meeting at this time. FCM may engage the services of
one or more agents and authorize other persons to assist in
soliciting proxies on behalf of FCM. Any solicitation of proxies by
or on behalf of FCM, including by any agent, will be done primarily
by mail, supplemented by telephone, internet, electronic
communication or other means of contact, pursuant to a dissident
information circular or by way of public broadcast, including
through press releases, speeches or publications and by any other
manner permitted under corporate and securities laws. Any such
proxies may be revoked by instrument in writing executed by a
shareholder or by his or her attorney authorized in writing or, if
the shareholder is a body corporate, by an officer or attorney
thereof duly authorized or by any other manner permitted by law.
FCM will not have any material interest, direct or indirect, by way
of beneficial ownership of securities or otherwise, in any matter
to be acted upon at any future requisitioned shareholders’ meeting.
Scott Freeman is a resident of the United States Virgin Islands and
is a citizen of the United States of America. Scott Freeman’s
principal occupation is a consultant and works on behalf of Scott
Freeman Consultant LLC, a limited liability company incorporated in
the State of Nevada. Scott Freeman directly owns 11,643,949 voting
shares of MindMed. Scott Freeman additionally holds an economic
interest in several million shares of MindMed held by Savant HWP
Holdings, LLC and its affiliate entities. Scott Freeman has not
been, within 10 years, a director, chief executive officer, or
chief financial officer of any company, that meets the following
conditions: (1) was subject to an order imposed by a securities
regulator, such as a management cease trade order imposed by
Canadian securities regulators, that was issued while the proposed
director was acting in the capacity as director, chief executive
officer or chief financial officer; or (2) was subject to an order
that was issued after the proposed director ceased to be a
director, chief executive officer or chief financial officer and
which resulted from an event that occurred while that person was
acting in the capacity as director, chief executive officer or
chief financial officer. Scott Freeman has not been, within 10
years, a director or executive officer of any company (including
the company in respect of which the information circular is being
prepared) that, while that person was acting in that capacity, or
within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its assets,
state the fact. Scott Freeman has not, within 10 years, become
bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency, or become subject to or instituted any
proceedings, arrangement or compromise with creditors, or had a
receiver, receiver manager or trustee appointed to hold the assets
of the proposed director, state the fact. The registered address of
MindMed is located at 1055 West Hastings Street, Suite 1700,
Vancouver, British Columbia, Canada, V6E 2E9. A copy of this press
release may be obtained on the Company’s SEDAR profile at
www.sedar.com
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