NEW YORK, Dec. 29, 2020 /PRNewswire/ -- On
November 4, 2020, United States District Court Judge
Sidney Stein appointed Roche
Cyrulnik Freedman LLP to be Lead Counsel on behalf of Lead
Plaintiff James Pappa in Steven
Burnham v. Qutoutiao, Inc. et al., 20-cv-06707-SHS
(S.D.N.Y.) and Howard Brown v.
Qutoutiao, Inc. et al., 20-cv-07717-SHS (S.D.N.Y.). This
securities class action is brought on behalf of anyone who acquired
shares of Qutoutiao, Inc. (QTT) (1) pursuant to the Company's
September 2018 initial public
offering or (2) from the market between September 14, 2018 and July 15, 2020 (the "Class Period").
The class action alleges that QTT violated federal securities
laws by issuing materially false and/or misleading information in
its IPO offering documents and in its public statements while
trading on NASDAQ. Specifically, that QTT failed to disclose to
investors that: (1) Qutoutiao replaced its advertising agent with a
related party, thereby bypassing third-party oversight of the
content and quality of the advertisements; (2) the Company placed
advertisements on its mobile application for products whose claims
could not be substantiated and thus were considered false
advertisements under applicable regulations; (3) as a result, the
Company would face increasing regulatory scrutiny and reputational
harm; (4) as a result, the Company's advertising revenue was
reasonably likely to decline; and (5) as a result of the foregoing,
Defendants' positive statements about the Company's business,
operations, and prospects, were materially misleading and/or lacked
a reasonable basis.
QTT offers a mobile application called Qutoutiao, meaning "fun
headlines" in Chinese, that provides a customized feed to its users
of aggregated articles and short videos from professional media and
freelancers. On September 14, 2018,
QTT issued its IPO, and sold 13.8 million shares at a price of
$7.00 per share.
On December 10, 2019, Wolfpack
Research published a report, alleging among other things, that the
Company 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
the Company to "perpetrate the unmitigated ad fraud that [Wolfpack]
observed in [its] sample." On this news, the Company's share price
fell $0.12, nearly 4%, to close at
$2.86 per share on December 11, 2019, on unusually heavy trading
volume.
The truth was fully revealed on July 15,
2020 when China's
state-controlled broadcasting network aired its annual consumer
rights event. That evening, the hosts 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, the Company's share price fell
$0.85, or 23%, to close at
$2.84 per share on July 16, 2020, on unusually heavy trading
volume.
In appointing Roche Cyrulnik Freedman LLP as Lead Counsel, the
Court recognized that the firm "is sufficiently qualified,
experienced, and capable to represent the interests of class
members in this action." The Court accepted the Parties'
stipulation and proposed order requiring Lead Plaintiff James Pappa
to file and serve a consolidated amended complaint no later than
January 15, 2021.
For further inquiries regarding this matter, please contact
Vel Freedman (vel@rcfllp.com) at 305
306-9211, Ivy T. Ngo
(Ingo@rcfllp.com) at (646) 876-3568, or Constantine Economides (Ceconomides@rcfllp.com)
at (305) 851-5997.
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SOURCE Roche Cyrulnik Freedman