Contract analysis

1. This First Amended Complaint arises from a coordinated scheme by Defendants Grizzly Peak Research LLC, Grizzly Peak Capital Partners LP, and Tobias Fenchurch to publish knowingly false and defamatory reports about Plaintiff Redstone Gaming Corp. for the purpose of profiting from short sales of Plaintiff's publicly traded securities. Defendants' scheme was calculated, deliberate, and undertaken with full knowledge

2. Between February 7 and February 21, 2024, Defendants published three fabricated "research" reports accusing Plaintiff of financial fraud, regulatory manipulation, and undisclosed related-party transactions. Each of these accusations was baseless. Each has since been affirmatively disproven by independent third-party investigations, including a supplemental forensic audit by Plaintiff's independent auditor, Pinnacl

3. These false publications caused Plaintiff's Nasdaq-listed common stock (ticker: RDGM) to plummet from $92.14 per share to $72.80 per share over the span of just fourteen days — a decline of approximately 21.0% — destroying approximately $1.427 billion in shareholder value at the trough. As of January 2025, Plaintiff's stock price has only partially recovered, and Plaintiff's market capitalization remains approxima

4. Defendants profited handsomely from this destruction. Defendant GPCP, the affiliated hedge fund controlled by Defendant Fenchurch, reaped estimated short-sale profits of approximately $13.15 million on a short position of approximately 680,000 shares of RDGM stock that had been established prior to the first publication. The timing and magnitude of that short position — coordinated with the sequential release of t

5. Plaintiff originally filed its Complaint in this action on February 28, 2024, naming only Grizzly Peak Research LLC as a defendant and asserting three causes of action for trade libel, intentional interference with prospective economic advantage, and unfair business practices. Through discovery and independent investigation, Plaintiff has since confirmed that Defendant GPCP was the entity that maintained and trade

II. PARTIES A. Plaintiff Redstone Gaming Corp.

6. Plaintiff Redstone Gaming Corp. ("RGC" or "Plaintiff") is a corporation organized and existing under the laws of the State of Nevada, with its principal executive offices located at 8800 Crimson Ridge Parkway, Suite 1200, Las Vegas, Nevada 89113. RGC's registered agent in Nevada is National Statutory Agents, Inc., 701 S. Carson Street, Suite 200, Carson City, Nevada 89701. RGC's Employer Identification Number ("EI

7. RGC's common stock is publicly traded on the Nasdaq Stock Market under the ticker symbol "RDGM." As of February 6, 2024 — the last trading day before the publication of the first defamatory report — RGC had approximately 73.8 million shares of common stock outstanding, and its shares traded at a closing price of $92.14 per share, giving it a market capitalization of approximately $6.8 billion.

8. RGC owns and operates eleven casino-resort properties across the states of Nevada, New Jersey, and Mississippi. In addition to its brick-and-mortar gaming operations, RGC licenses proprietary electronic gaming platforms to third-party casino operators. RGC also operates an iGaming division known as "Redstone Digital," which offers online gaming platforms to consumers in jurisdictions where online gaming is legal,

9. RGC's senior management team includes Marcus J. Calloway, Chief Executive Officer; Priya Ramaswaran, Chief Financial Officer; Derek Olafson, General Counsel and Executive Vice President, Legal Affairs; and Janelle Hu, Vice President, Investor Relations. Each of these individuals has been employed by RGC for a minimum of four years and has extensive experience in the gaming and hospitality industries.

10. For the fiscal year ended December 31, 2023 ("FY 2023"), RGC reported consolidated revenue of $3.42 billion, earnings before interest, taxes, depreciation, and amortization ("EBITDA") of $812 million (representing an EBITDA margin of approximately 23.7%), and net income of $394 million. These results were audited by RGC's independent auditor, Pinnacle Audit & Advisory LLP ("Pinnacle"), engagement partner Walter N

11. RGC's gaming operations are regulated by, among others, the Nevada Gaming Control Board, the New Jersey Division of Gaming Enforcement, and the Mississippi Gaming Commission. RGC has maintained all required licenses and approvals to conduct gaming operations in each jurisdiction in which it operates. RGC has never been cited for material regulatory violations by any gaming regulatory authority. B. Defendant Grizz

12. Defendant Grizzly Peak Research LLC ("GPR") is a limited liability company organized and existing under the laws of the State of Delaware, with its principal office located at 44 Maiden Lane, 7th Floor, San Francisco, California 94108. GPR's registered agent in Delaware is Pacific Corporate Services LLC, 1209 Orange Street, Wilmington, Delaware 19801. GPR's EIN is 85-3291064.

13. GPR publishes purported "short-seller research" reports on publicly traded companies. GPR distributes its reports through its subscription website, grizzlypeakresearch.com, and through its social media account on the X platform (formerly Fenmore Solutions), under the handle @GrizzlyPeakRes. At the time of the publications at issue in this action, the @GrizzlyPeakRes account had approximately 142,000 followers. GP

14. GPR's Managing Member is Defendant Tobias Fenchurch. GPR's Senior Analyst and co-author of the three defamatory reports at issue in this action is Ava Lin. Upon information and belief, GPR employs approximately eight to twelve additional staff members, including junior analysts and marketing personnel.

15. Upon information and belief, as of year-end 2024, GPR had approximately $22 million in cash and receivables. GPR derives revenue from subscription fees for its reports, from speaking and media engagements, and, upon information and belief, from the profits generated by the coordinated short-selling activity of its affiliated hedge fund, GPCP. C. Defendant Grizzly Peak Capital Partners LP

16. Defendant Grizzly Peak Capital Partners LP ("GPCP") is a limited partnership organized and existing under the laws of the State of Delaware. GPCP is named as a defendant in this First Amended Complaint for the first time. GPCP's principal office is located at 44 Maiden Lane, 7th Floor, San Francisco, California 94108 — the same address as GPR. GPCP's EIN is 85-3291078.

17. GPCP's general partner is Grizzly Peak Capital GP LLC ("GP LLC"), a Delaware limited liability company whose sole managing member is Defendant Tobias Fenchurch. Fenchurch thus exercises ultimate decision-making authority over GPCP's investment activities, trading strategies, and portfolio positions.

18. GPCP is an affiliated hedge fund that, upon information and belief, maintained estimated assets under management of approximately $185 million at the time of the publications at issue. GPCP maintained and traded the short position in RDGM stock that is at the center of this action.

19. Prior to the publication of the first defamatory report on February 7, 2024, GPCP held a short position of approximately 680,000 shares of RDGM stock, representing a notional value of approximately $62.66 million at the pre-publication closing price of $92.14 per share. Upon information and belief, GPCP closed its short position by mid-March 2024, purchasing shares at an estimated average price of $72.80 per shar

20. GPCP's short position, its timing relative to the publications, and its coordinated unwinding in the period immediately following the publications demonstrate that GPCP was an integral component of Defendants' short-and-distort scheme. D. Defendant Tobias Fenchurch

21. Defendant Tobias "Toby" Fenchurch ("Fenchurch") is an individual who is and at all relevant times was a resident of San Francisco, California. Fenchurch is named as a defendant in this First Amended Complaint for the first time. Fenchurch is sued in his individual capacity based on his direct personal participation in the tortious conduct alleged herein.

22. Fenchurch is the Managing Member of GPR and the sole managing member of GP LLC, which is in turn the sole general partner of GPCP. Fenchurch thus controls both the research and publication arm (GPR) and the trading and investment arm (GPCP) of the enterprise through which Defendants conducted the scheme alleged in this Complaint.

23. Fenchurch personally directed, oversaw, approved, and authorized the publication of all three defamatory reports at issue in this action. Fenchurch personally reviewed and approved drafts of each report before publication. Fenchurch personally instructed GPR's Senior Analyst, Ava Lin, to publish the third report before completing verification of the underlying factual allegations. Fenchurch personally maintained

24. By reason of his personal direction of, participation in, and control over the tortious conduct alleged herein, Fenchurch is jointly and severally liable for the damages caused by Defendants' scheme.

25. This Court has jurisdiction over this action pursuant to California Code of Civil Procedure sections 410.10 and 410.50. The amount in controversy exceeds the jurisdictional minimum of this Court.

26. This Court has personal jurisdiction over Defendant GPR because GPR maintains its principal office in San Francisco, California, and conducts substantial and continuous business activities within the State of California. GPR also purposefully directed its tortious publications at California residents, including RGC's investors and the investing public, through internet platforms accessible throughout California.

27. This Court has personal jurisdiction over Defendant GPCP because GPCP maintains its principal office in San Francisco, California, at the same location as GPR; because GPCP traded securities of a publicly traded company whose investors include numerous California residents; and because GPCP's trading activities were coordinated with GPR's publication activities directed at California.

28. This Court has personal jurisdiction over Defendant Fenchurch because Fenchurch is a resident of San Francisco, California; because Fenchurch personally directed, oversaw, and authorized the tortious publications at issue from California; and because Fenchurch personally directed the trading of the short position from California.

29. Venue is proper in Los Angeles County pursuant to California Code of Civil Procedure sections 395 and 395.5 because a substantial portion of the events and omissions giving rise to this action occurred in Los Angeles County, including injury to Plaintiff's business relationships with institutional investors, securities analysts, and investment advisors located in Los Angeles County. Upon information and belief, a

IV. FACTUAL ALLEGATIONS A. Background on Redstone Gaming Corp.

30. RGC is one of the leading gaming and entertainment companies in the United States. RGC owns and operates eleven casino-resort properties across three states: seven properties in Nevada, including three located on or near the Las Vegas Strip; two properties in New Jersey, including one in Atlantic City; and two properties in Mississippi, located in the Gulf Coast and River Region gaming markets. These properties c

31. In addition to its brick-and-mortar gaming and hospitality operations, RGC operates two significant business divisions. The first, Redstone Digital, is RGC's iGaming division, which offers proprietary online gaming platforms — including online slots, table games, sports betting, and poker — to consumers in jurisdictions where online gaming has been legalized. Redstone Digital has experienced rapid growth since it

32. RGC's common stock is listed and traded on the Nasdaq Stock Market under the ticker symbol "RDGM." As of February 6, 2024, the last trading day before the publication of the first defamatory report, RGC had approximately 73.8 million shares of common stock outstanding. The closing price of RDGM on that date was $92.14 per share, giving RGC a market capitalization of approximately $6.8 billion.

33. For FY 2023, RGC reported consolidated revenue of $3.42 billion, EBITDA of $812 million (representing an EBITDA margin of approximately 23.7%), and net income of $394 million. These results reflected strong performance across all of RGC's operating segments. RGC's FY 2023 financial statements were audited by Pinnacle Audit & Advisory LLP, engagement partner Walter Ng, CPA, with offices at 400 South 4th Street, Su

34. RGC's gaming operations are subject to extensive regulation by state gaming authorities, including the Nevada Gaming Control Board ("NGCB"), the New Jersey Division of Gaming Enforcement, and the Mississippi Gaming Commission. RGC is required to maintain gaming licenses in each jurisdiction in which it operates, and its operations, financial condition, and key personnel are subject to ongoing regulatory scrutiny.

35. Defendants GPR, GPCP, and Fenchurch operate as a coordinated "short and distort" enterprise. The scheme operates as follows: GPR and Fenchurch identify a publicly traded company as a target; GPCP, acting on Fenchurch's direction, establishes a short position in the target company's securities; and GPR then publishes inflammatory and misleading "research" reports containing false allegations designed to drive down

36. This coordinated scheme is not a legitimate exercise of financial journalism or research. It is a profit-driven enterprise in which the research reports serve as weapons designed to manipulate market prices for the direct financial benefit of Fenchurch and GPCP's investors.

37. Prior to the publication of the first defamatory report on February 7, 2024, GPCP, acting at Fenchurch's direction, established a short position of approximately 680,000 shares of RDGM stock. At the pre-publication closing price of $92.14 per share, this short position had a notional value of approximately $62.66 million — a massive, concentrated bet against RGC's stock price.

38. GPR disclosed its short position in boilerplate disclaimers appended to the end of each report. These disclaimers, however, were generic and perfunctory and did not disclose the size, timing, or magnitude of the short position. More fundamentally, the presence of a disclosure does not immunize Defendants from liability for the knowing or reckless publication of false statements of fact. The financial magnitude of

39. Fenchurch personally directed both the short-position sizing and the timing of the publications to maximize trading profit. Upon information and belief, Fenchurch determined the publication schedule — three reports released at weekly intervals over a fourteen-day period — to sustain downward pressure on RDGM's stock price and to prevent the price from recovering between publications, thereby maximizing the profit

1. Report 1: "House of Cards: Redstone Gaming's Manufactured Earnings" (February 7, 2024)

40. On February 7, 2024, GPR published a report entitled "House of Cards: Redstone Gaming's Manufactured Earnings" (the "First Report") on grizzlypeakresearch.com. The First Report was simultaneously distributed to GPR's approximately 142,000 followers via the @GrizzlyPeakRes social media account on the X platform (formerly Fenmore Solutions), and was subsequently picked up and redistributed by financial news aggrega

41. The First Report was approximately 48 pages in length. It was authored by Ava Lin and Tobias Fenchurch and bore the GPR logo and branding. The report purported to be the product of "extensive forensic analysis" and "months of investigative research."

42. The core false allegation of the First Report was that RGC fabricated approximately $410 million of its FY 2023 revenue through fictitious intercompany transactions between RGC's operating subsidiaries. The report alleged, among other things, that RGC inflated revenue by recording sham licensing fees between Redstone Digital and Crimson Studios that lacked economic substance and were designed to artificially infl

43. This allegation is demonstrably false. RGC's FY 2023 consolidated financial statements, including all intercompany transactions, were audited by Pinnacle Audit & Advisory LLP, which issued an unqualified audit opinion on February 2, 2024. In the course of its audit, Pinnacle independently verified all revenue figures, tested intercompany transactions for proper elimination in consolidation, and assessed the econo

44. Defendants knew or should have known that the revenue-fabrication allegation was false. Pinnacle's unqualified audit opinions on RGC's FY 2021–2023 financial statements were publicly available at the time of the First Report's publication. A competent financial analyst, conducting research in good faith, would have reviewed and given due weight to the auditor's findings before publishing allegations of revenue fa

45. The immediate market impact of the First Report was severe. RDGM closed at $84.37 on February 7, 2024, representing a single-day decline of $7.77 per share, or approximately 8.4%, from the prior day's closing price of $92.14. Trading volume in RDGM on February 7 was approximately 11.2 million shares, compared to the average daily trading volume of approximately 1.4 million shares over the preceding 30 trading day

2. Report 2: "Rigged Reels: How Redstone's Slot Software Cheats the Regulators" (February 14, 2024)

46. On February 14, 2024, one week after the First Report, GPR published a second report entitled "Rigged Reels: How Redstone's Slot Software Cheats the Regulators" (the "Second Report") on grizzlypeakresearch.com and via the @GrizzlyPeakRes social media account. Like the First Report, the Second Report was widely disseminated across financial media and investment platforms.

47. The Second Report was approximately 36 pages in length. It was authored by Ava Lin and Tobias Fenchurch and bore the GPR logo and branding. The report purported to present the results of "independent technical analysis" of RGC's electronic gaming systems.

48. The core false allegation of the Second Report was that RGC manipulated its random-number-generator ("RNG") software — the software that governs the randomness and fairness of electronic gaming machines — to inflate payout statistics reported to the Nevada Gaming Control Board. The report alleged that RGC's slot machines were programmed to produce artificially high payout percentages during periods when regulator

49. This allegation is demonstrably false. In response to the Second Report, the Nevada Gaming Control Board initiated an independent RNG audit of RGC's electronic gaming systems. That audit was conducted by the NGCB's Technology Division and concluded on March 29, 2024. The NGCB's audit cleared RGC's systems entirely, finding no evidence whatsoever of RNG manipulation, software tampering, or discrepancies between te

50. Ava Lin, the co-author of the Second Report, did not contact the Nevada Gaming Control Board before publication to verify any of the claims made in the report. A responsible researcher investigating allegations of RNG manipulation would, at a minimum, have consulted the regulatory authority responsible for testing and certifying the very systems at issue. Lin's failure to do so reflects either a knowing disregard

51. The market impact of the Second Report compounded the damage caused by the First Report. RDGM closed at $78.52 on February 14, 2024, representing a cumulative decline of $13.62 per share, or approximately 14.8%, from the pre-publication closing price of $92.14. The sequential timing of the Second Report — published exactly one week after the First Report, before the market had fully digested and evaluated the cla

3. Report 3: "Double Down on Fraud: Redstone's Related-Party Shell Game" (February 21, 2024)

52. On February 21, 2024, one week after the Second Report, GPR published a third report entitled "Double Down on Fraud: Redstone's Related-Party Shell Game" (the "Third Report") on grizzlypeakresearch.com and via the @GrizzlyPeakRes social media account. Like its predecessors, the Third Report was widely disseminated.

53. The Third Report was approximately 29 pages in length. It was authored by Ava Lin and Tobias Fenchurch and bore the GPR logo and branding.