SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP announces that a class action lawsuit has been filed in the Southern District of New York on behalf of (1) those who purchased or otherwise acquired Qutoutiao Inc. (NASDAQ:QTT) American Depositary Shares (“ADSs”) pursuant and/or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with Qutoutiao’s September 2018 initial public offering (“IPO”); and/or (2) purchasers of Qutoutiao securities between September 14, 2018 and July 15, 2020, inclusive (the “Class Period”). The case is captioned Burnham v. Qutoutiao Inc., No. 20-cv-06707, and is assigned to Judge Sidney H. Stein. The Qutoutiao class action lawsuit charges Qutoutiao, certain of its officers and directors, and the underwriters of its IPO with violations of the Securities Act of 1933 and/or the Securities Exchange Act of 1934.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Qutoutiao ADSs pursuant and/or traceable to the Registration Statement and/or Qutoutiao securities during the Class Period to seek appointment as lead plaintiff in the Qutoutiao class action lawsuit. A lead plaintiff will act on behalf of all other class members in directing the Qutoutiao class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Qutoutiao class action lawsuit. An investor’s ability to share in any potential future recovery of the Qutoutiao class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff of the Qutoutiao class action lawsuit or have questions concerning your rights regarding the Qutoutiao class action lawsuit, please provide your information here or contact counsel, Michael Albert of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at malbert@rgrdlaw.com. Lead plaintiff motions for the Qutoutiao class action lawsuit must be filed with the court no later than October 19, 2020.
Qutoutiao (which means “fun headlines” in Chinese) offers a mobile application of the same name that aggregates articles and short videos from professional media and freelancers and presents customized feeds to users. In September 2018, Qutoutiao completed its IPO, selling 13.8 million ADSs at a price of $7.00 per share. Qutoutiao received net proceeds of approximately $85.8 million from the IPO.
The Qutoutiao class action lawsuit alleges that in the Registration Statement and during the Class Period, defendants made false and/or misleading statements or failed to disclose that: (1) Qutoutiao replaced its advertising agent with a related party, thereby bypassing third-party oversight of the content and quality of its advertisements; (2) Qutoutiao placed advertisements on its mobile app for products whose claims could not be substantiated and thus were considered false advertisements under applicable regulations; (3) as a result, Qutoutiao would face increasing regulatory scrutiny and reputational harm; (4) as a result, Qutoutiao’s advertising revenue was reasonably likely to decline; and (5) as a result of the foregoing, defendants’ positive statements about Qutoutiao’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On December 10, 2019, Wolfpack Research published a report alleging, among other things, that Qutoutiao had overstated its revenues by recording non-existent advances from advertising customers. Moreover, the report alleged that Qutoutiao replaced its third-party advertising agent with a related party, thereby bypassing the agent’s oversight and allowing Qutoutiao to “perpetrate the unmitigated ad fraud that [Wolfpack] observed in [its] sample.” On this news, Qutoutiao’s share price fell nearly 4%.
Then, on July 15, 2020, hosts of a consumer rights gala stated that Qutoutiao had allowed ads on its platform promoting exaggerated or impossible claims from weight-loss products. For example, one such ad offered free weight-loss products valued at $14,300 that would help users lose more than 30 pounds a month. On this news, Qutoutiao’s share price fell 23%.
Finally, on July 17, 2020, Chinese media reported that Qutoutiao’s app had been removed from domestic Android app stores.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations, and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
