RADNOR, Pa.--(BUSINESS WIRE)--The law firm of Kessler Topaz Meltzer & Check, LLP reminds that an investor securities fraud class action lawsuit has been filed against Momo Inc. (Nasdaq: MOMO) (“Momo”) on behalf of those who purchased or otherwise acquired Momo securities between April 21, 2015 and April 29, 2019, inclusive (the “Class Period”).
Momo investors who purchased securities during the Class Period may, no later than July 15, 2019, seek to be appointed as a lead plaintiff representative of the class.
Investors who wish to discuss this securities fraud class action lawsuit or request additional information about this litigation are encouraged to contact Kessler Topaz Meltzer & Check attorneys James Maro, Jr. or Adrienne Bell at (888) 299-7706 (toll free) or online at: www.ktmc.com/momo-inc-securities-class-action.
According to the complaint, Momo operates a mobile-based social and entertainment platform in the People’s Republic of China (“PRC” or “China”). The company operates the Momo platform that includes its Momo mobile application (or “app”) and various related features, functionalities, tools, and services to users, customers, and platform partners. On February 23, 2018, Momo announced that it had reached a definitive agreement with Tantan Limited (“Tantan”), a social and dating app in China, and all of its shareholders, under which Momo agreed to acquire a 100% fully diluted equity stake in Tantan for approximately 5.3 million newly issued Class A ordinary shares of Momo and US$600.9 million in cash. Momo announced the successful closing of its acquisition of Tantan on May 11, 2018.
The Class Period commences on April 21, 2015. On April 20, 2015, after market hours, Momo filed its annual report on a Form 20-F with the SEC, reporting Momo’s financial and operating results for the 2014 fiscal year.
The complaint alleges that, on June 27, 2018, Spruce Point Capital Management LLC (“Spruce Point”) issued a short seller report on Momo, recommending a “strong sell” opinion on Momo’s shares. The Spruce Point report cited, inter alia, possible compliance issues with the content of Momo’s services under relevant PRC regulations, Momo’s failure to disclose corrective action taken by Chinese authorities against one of its variable interest entities (“VIE”), and that Momo was engaged in related party transactions and illicit business dealings. According to several agencies cited throughout the Spruce Point report, Momo had a reputation for being a “sex cam” service—i.e., Momo users were using its services for illicit sexual content. The Spruce Point report also alleged that Momo had failed to disclose that China had charged Beijing Momo, one of Momo’s VIEs, with illicit financial reporting activity, which coincided with three Momo directors citing “personal reasons” for their resignation. Additionally, the Spruce Point report alleged that Momo held a minority interest “in a very popular and highly rated illegal (in China) gambling operation,” the mobile gambling app Pokermaster, via another undisclosed VIE since July 2015. Following the release of the Spruce Point report, Momo’s American Depositary Receipt (“ADR”) price fell $2.48 per share, or 5.47%, to close at $42.86 per share on June 27, 2018.
Then, on April 29, 2019, three days after Momo filed the 2018 20-F, Momo issued a press release disclosing that the Tantan social and dating mobile app had been removed from certain mobile app stores at the direction of Chinese authorities. Following this news, Momo’s ADR price fell $2.51 per share, or 6.81%, to close at $34.36 per share on April 29, 2019.
The complaint alleges that throughout the Class Period, the defendants made false and/or misleading statements and/or failed to disclose that: (i) Momo’s compliance procedures and controls were inadequate to prevent, inter alia, illicit financial reporting activity; (ii) Momo’s social and dating app, Tantan, was materially noncompliant with PRC law and/or regulations; (iii) Tantan was consequently at an increased risk of being removed from Chinese app stores at the direction of Chinese governmental authorities; and (iv) as a result, Momo’s public statements were materially false and misleading at all relevant times.
Momo investors may, no later than July 15, 2019, seek to be appointed as a lead plaintiff representative of the class through Kessler Topaz Meltzer & Check, or other counsel, or may choose to do nothing and remain an absent class member. A lead plaintiff is a representative party who acts on behalf of all class members in directing the litigation. In order to be appointed as a lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not affected by the decision of whether or not to serve as a lead plaintiff.
Kessler Topaz Meltzer & Check prosecutes class actions in state and federal courts throughout the country involving securities fraud, breaches of fiduciary duties and other violations of state and federal law. Kessler Topaz Meltzer & Check is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. The firm represents investors, consumers and whistleblowers (private citizens who report fraudulent practices against the government and share in the recovery of government dollars). The complaint in this action was not filed by Kessler Topaz Meltzer & Check. For more information about Kessler Topaz Meltzer & Check, please visit www.ktmc.com.