Press Releases

Cohen Milstein Investigates Applied Digital Corporation for Violations of  Securities Exchange Act

August 16, 2023


WASHINGTON, D.C. August 16, 2023 – Cohen Milstein Sellers & Toll PLLC is conducting an investigation to determine whether Applied Digital Corporation (“Applied Digital” or the “Company”) and certain of its officers and directors made false and misleading statements and/or omissions in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.

A class action lawsuit was filed in the U.S. District Court for the Northern District of Texas by another law firm on behalf of purchasers of the common stock of Applied Digital Corporation (NASDAQ: APLD) between April 13, 2022 and July 26, 2023, inclusive (the “Class Period”). 

The complaint alleges that throughout the Class Period, Applied Digital and certain of its officers and directors (“Defendants”) made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Applied Digital had overstated the profitability of its datacenter hosting business and its ability to successfully transition into a low-cost AI Cloud services provider; (ii) Applied Digital’s Board of Directors was not independent within the meaning of NASDAQ listing rules; and (iii)  Applied Digital had overstated the efficacy of its business model and failed to maintain proper corporate governance standards.

The Class Period begins on April 13, 2022, the day Applied Digital conducted its initial public offering (“IPO”) on Nasdaq Global Select Market (“NASDAQ”), issuing 8 million shares of common stock priced at $5.00 per share for a total of approximately $40 million in proceeds. As a company publicly traded on the NASDAQ, Applied Digital was required to comply with Listing Rule 5605(b)(2), which states that a majority of the Company’s board of directors (the “Board”) must be comprised of independent directors. However, on May 23, 2023, Applied Digital entered into a loan and security agreement with B. Riley Securities, the primary underwriter of the IPO, and B. Riley Commercial Capital, LLC, also a subsidiary of B. Riley Financial, to supply “additional liquidity to fund the buildout of the Company’s recently announced AI cloud platform and datacenters by the Company.” The principal amount of the loan was up to $50 million, with an interest rate of 9.00% per annum, and a maturity date of May 23, 2025. However, Applied Digital repaid the total balance of the loan nearly two years ahead of its contractual maturity, a timeframe that allegedly corresponds with B. Riley’s business expansion efforts. In July 2023, market analysts, Wolfpack Research (“Wolfpack”) and The Bear Cave (“Bear Cave”), began scrutinizing and questioning Applied Digital’s business model as well as its connection with B. Riley. Following publication of the Wolfpack and Bear Cave reports, Applied Digital’s stock price fell $1.27 per share, or 14.16%, to close at $7.70 per share on July 6, 2023. Following publication of a separate report by Friendly Bear, on July 26, 2023, Applied Digital’s stock price fell $0.60 per share, or 6%, over the following two trading sessions, to close at $9.40 per share on July 28, 2023. It now trades at around $6.50 per share.

Cohen Milstein encourages all investors who purchased Applied Digital’s common stock between April 13, 2022 and July 26, 2023, or former employees with information concerning this matter to contact the firm.

If you are a Applied Digital shareholder and would like to discuss your right to recover for your economic loss, you may, without any cost or obligation, call Cohen Milstein’s Managing Partner, Steven J. Toll at (888) 240-0775 or (202) 408-4600, or email him at  Steven J. Toll is admitted in the District of Columbia and Virginia.

If you wish to serve as lead plaintiff, you must move the Court no later than October 11, 2023 to request an appointment.  Any member of the proposed class may retain Cohen Milstein or other attorneys to serve as your counsel in this action, or you may do nothing and remain an absent class member.

Cohen Milstein has significant experience in prosecuting investor class actions and actions involving securities fraud and is active in major litigation pending in federal and state courts throughout the nation.  Cohen Milstein has taken a lead role in numerous important cases on behalf of defrauded investors and has been responsible for a number of outstanding recoveries which, in the aggregate, total billions of dollars.  Prior results do not guarantee a similar outcome. 

If you have any questions about this notice or the action, or with regard to your rights, please contact either of the following:

Steven J. Toll, Esq. or Samuel Bloom

Cohen Milstein Sellers & Toll PLLC

1100 New York Avenue, N.W.

Fifth Floor

Washington, D.C. 20005

Telephone: (888) 240-0775 or (202) 408-4600;


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