On April 4, 2018, investors sued Longfin Corp. (“Longfin” or the “Company”) in United States District Court, Eastern District of New York. The federal securities class action alleges that plaintiffs acquired Longfin stock at artificially inflated prices between December 13, 2017 and April 2, 2018 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. Here’s everything you need to know about the Longfin class action lawsuit:

Summary of the Allegations

Company Background

According to its website, Longfin (NASDAQ: LFIN) is a finance/technology company involved in the following activities: importer/exporter financing, trade insurance backed financing and financial institution intermediation. It also engages in electronic market making, blockchain-powered Smart Contract Solutions, and blockchain-powered treasury management.

The Company was incorporated in Delaware and has executive offices in New York City. It “went public” on the NASDAQ on December 13, 2017 and sold more than 1.1 million shares at $5 through its initial public offering (IPO).

Summary of Facts

Longfin and two of its senior officers are now accused of deceiving investors by lying and withholding critical information about the Company’s business practices and prospects during the Class Period.

Specifically, they are accused of omitting truthful information about its IPO, acquisition of Ziddu.com, eligibility for inclusion on the Russell 2000 and 3000 indices, and resulting investigations, from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Longfin stock to trade at artificially inflated prices during the time in question.

The truth emerged in a series of news articles, press releases, reports and SEC filings beginning on March 26, 2018.

A closer look…

As alleged in the April 4 complaint, Longfin repeatedly made misleading public statements in an effort to manipulate stock prices during the Class Period.

For instance, on a form filed with the SEC on December 15, 2017, the Company detailed its acquisition of Ziddu.com. In this context it stated in pertinent part: “Ziddu Warehouse Coin is a smart contract that enables Importers and Exporters to use their Ziddu coins that are loosely pegged to Ethereum and Bitcoin Crypto Currency. The Importers/Exporters convert offered Ziddu coins into Ethereum and Bitcoin Cryptocurrencies and use the proceeds for their working capital needs.”

In a press release issued on March 22, 2018, the Company announced its inclusion on the Russell indices, saying in pertinent part: “Russell indices are widely used by investment managers and institutional investors for both index funds and as benchmarks for passive and active investment strategies in the U.S. marketplace.”

What the Company failed to disclose, however, was that it “included several false statements in its SEC filings in connection with its IPO, which prompted an SEC investigation…” The Company also failed to disclose was that it acquired Ziddu.com “shortly after the IPO” to “capitalize on the popularity of blockchain companies in order to manipulate the Company’s stock price,” and that the acquisition also prompted an SEC investigation. Finally, Longfin failed to disclose that it knew it was “ineligible to be listed on the Russell 2000 and 3000 indices.”

Impact of the Alleged Fraud on Longfin’s Stock Price and Market Capitalization

The following chart illustrates the stock price during the class period:

Actions You May Take

If you have purchased shares during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole.

NOTE: The deadline to file for lead plaintiff in this class action is June 4, 2018. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court. Typically, the plaintiff or plaintiffs with the largest losses are appointed lead plaintiff.

In order to identify your potential exposure to the alleged fraud during the time in question, you may wish to perform an analysis of your transactions in Longfin common stock using court approved loss calculation methods.

Recently Filed Cases

Listed below are recently filed securities class action cases being monitored by us, along with the class period and the deadline to file a motion to be appointed as the Lead Plaintiff in the action.  Please contact us if you would like an LK report for any of these cases:

Class Action Tracker

About Us

Levi & Korsinsky is a leading securities litigation firm with a hard-earned reputation for protecting investors’ rights and recovering losses arising from fraud, mismanagement and corporate abuse.  With thirty attorneys and offices in New York, Connecticut, California and Washington D.C., the firm is able to litigate cases in various jurisdictions in the U.S., England, and in other international jurisdictions.

Levi & Korsinsky provides portfolio monitoring services for high-net worth investors and institutional clients.  Our firm also assists investors in evaluating whether to opt-out of large securities class actions to pursue individual claims.

For additional information about this case or our institutional services, please contact us.