Securities Investigation: CN Energy Group. Inc. (NASDAQ: CNEY)

The White Law Group is investigating potential claims involving broker dealers who may have unsuitably recommended CN Energy Group Inc. to investors.

Background on CN Energy Group Inc.

CN Energy Group Inc. (NASDAQ: CNEY) through its subsidiaries, engages in the manufacture and supply of wood-based activated carbon primarily in China. The company’s activated carbon is used in pharmaceutical manufacturing, industrial manufacturing, water purification, environmental protection, and food and beverage production. The company was incorporated in 2018 and is based in Lishui, China.

In January 2023, CN Energy Group Inc. offered shares of its common stock for sale to investors. As of February 28, 2024, the average post offering return was –91.4%. The company’s common stock was traded on the Nasdaq Capital Market, or NASDAQ, under the symbol “CNEY.”

According to its prospectus, investing in CNEY’s securities is highly speculative and involves a high degree of risk.

Latest News: CN Energy Group

As of June 3, 2024, according to a PR Newswire article: CN Energy Group. Inc. announced that it received a written notice from The Nasdaq Stock Market LLC on May 28, 2024. The Notice notifies that the Company is not in full compliance with the minimum bid price requirement set forth in Nasdaq Listing Rules for continued listing on the Nasdaq Capital Market.

The reason for the delisting is the Nasdaq Listing Rule 5550(a)(2) that requires listed securities to maintain a minimum bid price of US$1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.

Based on the closing bid price of the Company’s Class A ordinary shares for the 30 consecutive business days from April 15 through May 24, 2024, the Company no longer meets the minimum bid price requirement.

If the Company does not regain compliance with the Minimum Bid Price Rule by November 25, 2024, the Company may be eligible for an additional 180-day calendar period to regain compliance or be subject to delisting.

Performance: NASDAQ: CNEY

As of July 6, 2024, according to Market Watch shares of CN Energy Group Inc. (NASDAQ: CNEY) are down -95.09% over the last 12 months.

Risks of Investing in Biotech Investments

Regulatory Risk: The biotech industry is heavily regulated, and the success of a company often hinges on obtaining approval from regulatory bodies like the FDA. The approval process is rigorous, and a failure to gain approval can lead to substantial financial losses. This risk is crucial because it directly impacts a company’s ability to bring products to market.

Clinical Trial Risk: Clinical trials are essential for proving a biotech product’s safety and efficacy, but they are also unpredictable. Negative or inconclusive trial results can lead to significant setbacks, including the possibility of abandoning a product altogether. Given that much of a biotech company’s value can be tied to a single product, this risk is paramount.

Market Adoption Risk: Even after clearing regulatory hurdles and succeeding in clinical trials, a product’s success is not guaranteed. Market adoption risk involves the uncertainty of how well a new product will be received by healthcare providers, patients, and insurers. If a product fails to gain traction in the market, the company’s revenue and stock price can suffer, making this a critical factor to consider.

Unsuitable Investment Recommendations

Broker due diligence is a process undertaken by brokerage firms to ensure they are recommending and selling investment products appropriate for their clients. This process protects the interests of the brokerage firm and its clients by ensuring that the investments offered are suitable for the client’s investment objectives, risk tolerance, and financial situation.

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 with Securities Attorneys

If you have suffered investment losses in CN Energy Group Inc., 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.