Pomerantz LLP Secures $12 Million Settlement in Securities Class Action Against PureCycle Technologies

Pomerantz LLP, as sole Lead Counsel, recently achieved a $12 million settlement in a securities class action against PureCycle Technologies, Inc., The United States District Court for the Middle District of Florida granted final approval of the settlement on October 8, 2024.

PureCycle is a plastic recycling company that went public via a “de-SPAC” reverse merger with Roth CH Acquisition I Co., a special purpose acquisition company (“SPAC”). SPACs are shell companies set up solely to raise money through an IPO to eventually acquire another company. PureCycle had the dubious honor of being merely one in a long line of questionable reverse mergers Byron Roth has brought public, while misleading investors regarding the underlying business, only to slap a “buy” rating on the stock and collect millions in compensation, leaving innocent investors to suffer the consequences.

In May 2021, Hindenberg Research published a report entitled PureCycle: The Latest Zero-Revenue ESG SPAC Charade, sponsored by the Worst of Wall Street which raised various questions regarding, among other things, the efficacy and safety of PureCycle’s recycling technology, and the veracity of the company’s financial projections. The allegations of the Hindenburg Report caused PureCycle’s stock price to plummet about 40% in a single day, damaging investors.

Pomerantz’s complaint alleged, among other things, that Defendants falsely told investors that PureCycle’s supposedly revolutionary recycling technology was “proven” to convert a broad range of waste polypropylene plastic into virgin polypropylene more cost effectively than traditional methods though the technology underlying the process was in fact unproven, presented serious issues at lab scale, and could not cost effectively utilize a broad range of waste polypropylene.  Defendants also falsely told investors that PureCycle’s management had decades of experience in plastics and in scaling early stage companies though they had no relevant background in plastics and had previously brought six companies public that they drove into the ground.

The settlement class includes any person or entity that acquired PureCycle securities through the class period of November 16, 2020, and November 10, 2021.  Partner Tamar A. Weinrib led the litigation, Theodore v. PureCycle Technologies, Inc., et al., Case No. 6:21-cv-809 (M.D. Fla.).  “The settlement is an excellent result for the settlement class following three hard fought years of litigation. The all cash settlement provides certain recovery now in the face of sizable risks of recovering any judgment at trial given the complexities of this type of litigation, given the Company’s dwindling cash supply, and given that it has yet to earn any meaningful revenue from its sole product.”