Vape and CBD product manufacturer Chill Brands has suspended its chief executive Callum Sommerton after allegations were raised about “the use of inside information”.
The UK-listed company has hired law firm Fieldfisher to carry out an investigation following the claims and it has begun the process of appointing an interim boss.
Chill Brands’ share price plunged as much as 31% in Monday morning trading after the announcement.
Chill Brands said: “This suspension does not constitute disciplinary action or a disciplinary penalty and does not imply any assumption that Mr Sommerton is guilty of any misconduct or that any decision has been made.”
The company added that it will engage with the Financial Conduct Authority over the investigation, and the findings will be reported “in due course”.
It assured customers and shareholders that the company will continue operating as normal in the meantime.
Mr Sommerton said: “I am surprised and disappointed by the allegations.
“I am confident that I will be vindicated and will avoid further comment at this time to allow the process to run its course.”
The London-based company produces and distributes nicotine-free vapes under the Chill Zero brand, and has announced plans to launch its own online marketplace for third-party products.
Chill Brands also makes CBD-based products and chewable sweets called Chill gummies.
Last week, it was rocked by a letter from its largest single shareholder seeking to oust two of its senior directors and requisition an unscheduled general meeting.
Jonathan Swann, who holds a 13.45% stake in the company, demanded the removals of chief commercial officer Antonio Russo and chief operating officer Trevor Taylor, and “that any person appointed as a director of the company since the date of the requisition…be removed”.
Chill Brands’ board responded by saying it was “deeply concerned by this situation and stands behind its directors”.
The manufacturer’s shares have had a rollercoaster year, having fallen as much as 35% in January when Prime Minister Rishi Sunak announced a ban on disposable and single-use vapes.
Mr Sommerton responded at the time by saying many of its products were excluded from the ban because of the addition of USB charging ports, meaning they are reusable.
The ban is expected to come into force next year, including a six-month period for retailers to phase out existing stock.