KPMG agrees to settle its part of Canopy Growth securities case
For investors, the heart of the matter is a single question the court set as the common issue: did KPMG’s auditor’s report for Canopy for the fiscal year ended March 31, 2022 contain a misrepresentation within the meaning of the Securities Act. Nothing has been decided on that question. The order clears the way for a later hearing to approve the settlement itself.
The certified class is broad. It covers people and entities that acquired Canopy securities in the secondary market between June 1, 2021 and June 22, 2023, and held some or all of them to the close of trading on May 10, 2023 or June 22, 2023. It reaches Canadian residents and anyone who bought on a Canadian exchange or an exchange outside the US. In plain terms, advisors who put clients into Canopy during that window, or funds that held it, may have clients inside the class.
Those clients have decisions to make. Class members who want out must file an opt-out form within 45 days of the first publication of the long-form notice. Anyone who stays in and does not opt out will be bound by the settlement and gives up the right to sue separately on the same matters. Objections to the deal, or to class counsel’s fees, are due 15 days before the approval hearing.
The court also flagged how the money will be handled. The plaintiff and class counsel are recommending that the net settlement amount not be paid out yet, but held until the action against all defendants wraps up. The order does not state a dollar figure for the settlement.
The takeaway for the industry is straightforward. Auditor liability for secondary-market disclosure is live in Canada, and KPMG has chosen to resolve its exposure rather than test the misrepresentation question at trial. Advisors and compliance teams with Canopy positions in client accounts during the class period should be watching the notice and opt-out timeline closely.
