- Company Name
- QuinStreet, Inc.
- Stock Symbol
- Class Period
- February 10, 2016 to April 10, 2018
- Motion Deadline
- June 26, 2018
- Northern District of California
The complaint charges QuinStreet and certain of its officers with violations of the Securities Exchange Act of 1934. QuinStreet is an internet performance marketing and media company that matches verified prospects with client brands by supplying qualified clicks and qualified inquiries to advertisers.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding QuinStreet’s business and prospects, including that QuinStreet-owned websites experienced phony, low quality traffic, QuinStreet recklessly disregarded the occurrence of click-through fraud, and QuinStreet’s practices were not geared toward providing its clients with valuable customers or high-quality leads or clicks. As a result of these false statements and/or omissions, QuinStreet securities traded at artificially inflated prices during the Class Period, with its stock reaching close to $15 per share.
Then on April 11, 2018, before the market opened, Kerrisdale Capital published a report discussing QuinStreet’s operations, including the Company’s awareness of and involvement in generating fake web traffic and poor quality clicks for its customers. According to Kerrisdale, after researching sources of QuinStreet website traffic, it found “evidence of phony, low quality, and suspicious traffic.” In addition, when interviewing former QuinStreet employees, Kerrisdale found a recurrent theme of “distaste for the way the company does business,” with one former employee stating that “QuinStreet ‘does a lot of stuff that I think is kind of borderline unethical for clients,’ including knowingly selling them bad leads or turning a blind eye to questionable affiliates.” The employee described the Company as “operating ‘in the gray area of the internet.’” On this news, the price of QuinStreet shares fell $2.18 per share, or more than 17%, to close at $10.14 per share on April 11, 2018.