Gridsum Holding Inc.
- Company Name
- Gridsum Holding Inc.
- Stock Symbol
- Class Period
- April 27, 2017 to April 20, 2018
- Motion Deadline
- June 24, 2018
- Southern District of New York
The complaint charges Gridsum and certain of its officers with violations of the Securities Exchange Act of 1934. Gridsum is a holding company that designs and develops sophisticated data analysis software for multi-national and domestic enterprises and government agencies in China. The Company offers software that allows customers to collect and analyze information that is collected, indexed and stored in an organized manner.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and financial statements. Specifically, during the Class Period, defendants’ failed to disclose that Gridsum lacked effective internal control over financial reporting and, as a consequence, Gridsum’s financial statements were inaccurate and misleading and did not fairly present, in all material respects, the financial condition and results of operations of the Company. As a result of this information being concealed, the price of Gridsum’s American Depositary Receipts (“ADRs”) was artificially inflated during the Class Period to as high as $13.39 per share.
Then on April 23, 2018, Gridsum issued a press release, entitled “Gridsum Reports Suspension of Audit Report on Financial Statements,” announcing that the Company’s “audit report for [its] financial statements for the year ended December 31, 2016 should no longer be relied upon.” According to the release, Gridsum’s auditor had identified certain issues when conducting its audit of Gridsum’s financial results for the year ended December 31, 2017, which related to “certain revenue recognition, cash flow, cost, expense items, and their underlying documentation which [the auditor] had previously raised” with Gridsum. As a result of these issues, the Company’s Form 20-F filing would be delayed until the audit was complete. On this news, the price of Gridsum ADRs fell $1.17 per share, or more than 16%, to close at $6.12 per share on April 23, 2018.