お知らせ • Sep 16
Paysign, Inc. Announces Summary Notice of Pendency and Proposed Settlement of Stockholder Derivative Actions
Paysign, Inc. posted the following summary notice of pendency and proposed settlement of stockholder derivative actions. The following stockholder derivative actions (the “Derivative Actions”), are being settled on the terms set forth in a Stipulation and Agreement of Settlement dated November 25, 2024 (the “Stipulation”): (i) the above-captioned consolidated action, titled Toczek v. Newcomer et al, Case No. 2:20-cv-01722-JCM-NJK; (ii) Blanchette v. Paysign, Inc. et al., Case No. 2:23-cv-01632-JCM-BNW (D. Nev.); and (iii) Jeewa v. Newcomer, et al., Case No. 2:23-cv-02129-RFB-EJY (D. Nev.). The Derivative Actions allege that, inter alia, between March 12, 2019 through September 17, 2020, at least, the Individual Defendants breached their fiduciary duties by issuing and/or causing the Company to issue materially false and misleading statements (including by soliciting a materially false and misleading proxy statement allegedly in violation of Section 14(a) of the Securities Exchange Act of 1934) and by failing to disclose material facts to the public regarding, among other things, that: (1) the Company failed to design, implement, and maintain effective IT general controls, specifically pertaining to user access and the Company’s systems change management; (2) the Company failed to maintain effective disclosure controls and internal controls over its financial reporting; and (3) due to the foregoing, the Company would be forced to delay filing its 2019 10-K and holding its 2019 year-end earnings call. The Derivative Actions also allege that the Individual Defendants breached their fiduciary duties by failing to correct and/or causing the Company to fail to correct these false and misleading statements and omissions of material fact to the investing public, while four of the Individual Defendants engaged in lucrative insider sales, netting combined proceeds of over $5.7 million. The Derivative Actions allege that, as a result of the foregoing, the Company experienced reputational and financial harm. Defendants have denied and continue to deny each and all of the claims and allegations of wrongdoing asserted in the Derivative Actions. Pursuant to the terms of the Settlement, Paysign agrees to implement and maintain certain corporate governance reforms that are outlined in Exhibit A to the Stipulation (the “Reforms”). The Reforms shall be maintained for five (5) years. Paysign acknowledges and agrees that the filing, pendency, and settlement of the Derivative Actions was the cause of the Company’s decision to adopt, implement, and maintain the Reforms. Paysign also acknowledges and agrees that the Reforms confer substantial benefits to Paysign and its shareholders. After negotiating the principal terms of the Settlement, counsel for the Parties, with the assistance of the Mediator, negotiated the attorneys’ fees and expenses to be paid to Plaintiffs’ Counsel, subject to Court approval (the “Fee and Expense Amount”). In light of the substantial benefits conferred upon the Company and its stockholders, Defendants’ insurers shall pay to Plaintiffs’ Counsel $607,500.00 for their attorneys’ fees and expenses, subject to Court approval. Defendants also agreed not to object to the request for the Court to approve Service Awards of up to two thousand dollars ($2,000.00) for each of the four Plaintiffs, to be paid from the Fee and Expense Amount. On November 14, 2025, a hearing (the “Settlement Hearing”) will be held before the Honorable Richard F. Boulware at the United States District Court for the District of Nevada, Las Vegas Division, 333 Las Vegas Boulevard South, Las Vegas, Nevada 89101, for the purpose of determining whether the Settlement should be approved as fair, reasonable, and adequate and whether the Court should approve the agreed-to Fee and Expense Amount and the Service Awards for Plaintiffs. Because this is not a class action, except as otherwise provided for in the Stipulation with respect to the Plaintiffs, no Current Paysign Stockholder has the right to receive any individual compensation as a result of the Settlement. This Summary Notice provides a condensed overview of certain provisions of the Stipulation and the full Notice of Pendency and Proposed Settlement of Stockholder Derivative Actions (the “Notice”). It is not a complete statement of the events of the Derivative Actions or the terms set forth in the Stipulation. This summary should be read in conjunction with, and is qualified in its entirety by reference to, the text of the Stipulation.