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Lawsuit Overview
Settlement Overview
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March 31, 2021 - The court preliminarily approved the settlement.
March 23, 2021 - A stipulation of settlement was filed by the parties.
November 20, 2019 - An amended complaint was filed.
May 15, 2019 - An investor in shares of Momo Inc. (NASDAQ: MOMO) filed a lawsuit in the U.S. District Court for the Southern District of New York over alleged violations of Federal Securities Laws by Momo Inc. in connection with certain allegedly false and misleading statements made between April 21, 2015 and April 29, 2019.
China based Momo Inc. operates a mobile-based social and entertainment platform in the People's Republic of China. Momo Inc. reported that its annual total Revenue rose from over 8.88 billion CNY in 2017 to over 13.4 billion CNY in 2018 and that its Net Income increased from over 2.14 billion CNY in 2017 to over 2.81 billion CNY in 2018.
On June 27, 2018, a short seller report was published on Momo, recommending a “strong sell” opinion on the Company’s shares citing, inter alia, possible compliance issues under PRC regulation. According to several agencies cited throughout the report, Momo had a reputation for being a “sex cam” service—i.e., Momo users were using Momo’s services for illicit sexual content. The report highlighted how these services put Momo at an increased risk of violating the Ministry of Commerce’s (“MOC”) and the State Administration of Radio, Film and TV’s (“SARFT”) new regulations limiting the behavior of live streamers and raising accountability for platforms. The report also alleged various illicit financial reporting activity by Momo.
On April 29, 2019, Momo Inc. announced that the Tantan social and dating mobile app had been removed from certain mobile app stores at the direction of Chinese authorities Shares of Momo Inc. (NASDAQ: MOMO) closed on May 15, 2019 at $29.88 per share.
According to the complaint the plaintiff alleges on behalf of purchasers of Momo Inc. (NASDAQ: MOMO) common shares between April 21, 2015 and April 29, 2019, that the defendants violated Federal Securities Laws.
More specifically, the plaintiff claims that between April 21, 2015 and April 29, 2019, the defendants made false and/or misleading statements and/or failed to disclose that Momo’s compliance procedures and controls were inadequate to prevent, inter alia, illicit financial reporting activity, that Momo’s social and dating app, Tantan, was materially noncompliant with PRC law and/or regulations, that Tantan was consequently at an increased risk of being removed from Chinese app stores at the direction of Chinese governmental authorities, and that as a result, Momo’s public statements were materially false and misleading at all relevant times.