Blue Star Foods Corp. Securities Investigation
The White Law Group is investigating potential claims involving brokerage firms for the unsuitable sale and recommendation of investments in Blue Star Foods Corp.
The company’s common stock is traded on the Nasdaq Capital Market, or NASDAQ, under the symbol “BSFC.”
In February 2023, Blue Star Foods Corp. offered shares of its common stock for sale to investors. As of February 28, 2024, the average post offering return was –97.5%.
According to MarketWatch, shares of BSFC have declined –97.25% in the past 12 months.
Background and Latest News
The company was incorporated on October 17, 2017, in the State of Delaware as a blank check company to be used as a vehicle to pursue a business combination. Prior to the Merger, it engaged in organizational efforts. Following the Merger, it discontinued its prior activities of seeking a business for a merger or acquisition and acquired the business of John Keeler & Co. Inc., d/b/a Blue Star Foods, a Florida corporation formed on May 5, 1995.
Blue Star Foods Corp. is an international seafood company, which processes, imports, packages, and sells refrigerated seafood products.
According to its prospectus, investing in Blue Star Food Corp.’s securities is highly speculative and involves a high degree of risk.
Investing in a blank check company, also known as a Special Purpose Acquisition Company (SPAC), comes with a unique set of risks. Here are some of the top risks to consider:
Acquisition Risk – There is no guarantee that a SPAC will successfully find and merge with a suitable target company. If a SPAC fails to complete a merger within a specified timeframe (usually 18-24 months), it will liquidate and return the capital to investors, often minus expenses, which can result in losses.
Valuation Risk – Post-merger, the valuation of the acquired company can be highly speculative. SPACs often target high-growth companies, which may not yet be profitable. These companies may have valuations based more on future potential than current financial performance, making the investment risky.
Market Risk – SPACs can be subject to market volatility, both before and after a merger. Changes in market conditions can affect the performance of the SPAC and the acquired company. The market’s perception of SPACs can also fluctuate, influencing stock prices.
Dilution Risk – SPACs often issue additional shares or warrants to raise capital for the acquisition. This can dilute the value of existing shares. Moreover, sponsors typically receive a substantial number of shares (often 20% of the SPAC) at a nominal price, which can also be dilutive to public shareholders.
Broker Responsibilities and Investor Protections
Broker dealers are required to conduct thorough due diligence on any investment they recommend and ensure that all recommendations are suitable for their clients. Firms that fail in this duty may be held liable for investor losses through FINRA arbitration claims.
If a broker or brokerage firm makes an unsuitable investment recommendation or fails to disclose the associated risks adequately, they may be found liable for investment losses in a FINRA arbitration claim. Fortunately, FINRA provides an arbitration forum for investors to resolve such disputes.
Class Action vs. Individual FINRA Arbitration Lawsuit
You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case. The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option. Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.
Free Consultation
If you have suffered investment losses in Blue Star Foods Corp. you may have recovery options. The securities attorneys at The White Law Group offer free consultations and can be reached at 1-888-637-5510.
About The White Law Group
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. The firm represents investors across the country in claims against their brokerage firms.
Last modified: August 6, 2024
