Kaspien Holdings

Kurta Law is investigating brokers who recommended shares of Kaspien Holdings (KSPN). Kaspien was a high-risk investment that would have been unsuitable for many investors. Recommendations of investments that are beyond an investor’s risk tolerance violate securities rules and regulations. For instance, Regulation Best Interest requires brokers to consider their customers’ best interests before recommending a security. This regulation also requires brokers to exercise due diligence before making a recommendation, meaning that brokers should know how much risk is involved in an investment that they recommend.

If you believe you are the victim of broker misconduct, consider reaching out to a securities attorney. Our securities attorneys do not collect a fee unless they win your case and can review your dispute for free. Call (877) 600-0098 or email info@kurtalawfirm.com.

The Offering

The prospectus dated March 16, 2021, announced that Kaspien Holdings was offering 416,000 shares of common stock. At the time, Kaspien stock was trading for $42.15 per share. As of April 11, 2024, Kaspien currently traded at $0.01 per share on the OTC market. In December 2023, Kaspien Holdings announced it would voluntarily de-list from the stock exchange.

About Kaspien Holdings

According to the prospectus, Kaspien Holdings “helps brands achieve their online retail goals through its marketplace growth software.” The prospectus is the document that companies file with the Securities and Exchange Commission in order to register their stock offering.

The prospectus also states: “We reported a net loss of $58.7 million for the year ended February 1, 2020, and a net loss of $97.4 million for the year ended February 1, 2019. We have an accumulated deficit of $112.8 million as of October 31, 2020.”

Risk Factors

The prospectus features a substantial list of risk factors associated with a Kaspien Holdings investment. The following are just some of the risks.

Immediate Dilution

The price of the common stock offered is higher than the net tangible book value per share price of the common stock, so investors will see a substantial dilution. The public offering price is $32.50 per share, and if you purchased shares of this common stock, you would suffer an “immediate and substantial dilution of $26.54 per share.”

Use of Proceeds

Kaspien Holdings’ management had broad discretion as to the use of the stock offering proceeds. The failure of the management to use the proceeds effectively could hurt the business.

Additional Stock Offerings

Kaspien Holdings needs additional capital and may issue more stock in an effort to raise funds. This new stock could dilute the value of existing stock.

Aegis Capital Corp. Underwriting    

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm.  

Kurta Law Can Help

If you lost money on Kaspien Holdings, you may have no choice but to go through FINRA arbitration. Many investment contracts contain pre-dispute arbitration clauses that require investors to use FINRA arbitration rather than suing in civil court. FINRA arbitration proceedings are non-public and similar to civil proceedings, with a few distinct differences. Our securities attorneys are experts in FINRA arbitration and can guide you through every step of the process.

Contact us today for a free consultation: (877) 600-0098 or info@kurtalawfirm.com.