A securities class action was recently filed against MOL Global, Inc., as well as certain officers.
MOL Global provides electronic payment solutions to customers in Southeast Asia. Interested parties can use the service to acquire both online goods and services.
Lawsuit basics
Pomerantz LLP announced the legal action on Nov. 24, 2014, bringing it forth on the behalf of all organizations or individuals who bought company securities between Oct. 9, 2014 and Nov. 20, 2014. These dates are inclusive and represent the class period.
The law firm filed the suit, which is making an effort to recover damages against defendants based on their alleged breaches of the Securities Exchange Act of 1934, in the United States District Court, Southern District of New York. The lawsuit was brought forth under the docket number 14-cv-09357.
Legal investigation
Pomerantz LLP filed the lawsuit after announcing on Nov. 21, 2014, that it was looking into claims on behalf of the company's investors. Amidst this inquiry, the law firm was looking into whether the company, as well as certain directors and or officers, breached Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
Securities class action allegations
The securities class action alleged that during the class period, defendants made false and or misleading statements, and or failed to disclose material facts. According to the lawsuit, the defendants did not articulate that the company would be unable to stick to its aforementioned deadline of Nov. 21, 2014, for reporting its results for third quarter 2014.
In addition, the suit claims they did not reveal the company was providing inflated figures for both the revenue and earnings generated by the company, and failed to disclose that the growth trends contained in the firm's Offering Documents could not continue under the company's actual business model. Finally, they did not reveal that as a result of the aforementioned, company financial statements were materially false and misleading at all relevant times.
Company IPO
On Oct. 3, 2014, the company filed an amended Registration Statement for its initial public offering, and on Oct. 8, 2014, this document became effective. MOL Global sold 13.5 million American Depositary shares for $12.50 each. Shareholders chipped in roughly 6 million of these units of ownership, and the company sold approximately 7.5 million ADSs.
Deutsche Bank, which had helped out with the company's IPO, recommended that investors "buy" company shares in a research note dated Nov. 20, 2014, and provided a $12 price target. When supplying this objective for share value, the note stated the ADSs could surge 49.44 percent from their previous close.
On the same day the research note was issued, the company announced that it was postponing the release date for its third quarter 2014 financial results to Dec. 3, 2014, before the start of trading. Previously, it had scheduled these results to be released on Nov. 21. In addition, MOL Global announced its chief financial officer had resigned, effectively immediately, citing personal reasons.
On Nov. 21, Deutsche Bank warned that investors should exercise caution regarding company shares, stating that the prior day's announcement could be "ominous." That day, shares of the electronic payment solutions provider fell nearly 54 percent to finish the day at $4.09 each. This sharp decline happened amid very high transaction volume. At this level of $4.09, ADSs were 67 percent less than their IPO price of $12.50.
Eligible investors interested in serving as Lead Plaintiff in the securities class action have until Jan. 23, 2015, to make a request to the court.