Kessler Topaz Meltzer & Check, LLP Announces Investor Securities Fraud Class Action Lawsuit Filed against Momo Inc.

The law firm of Kessler Topaz Meltzer & Check, LLP reminds that an investor securities fraud class action lawsuit has been filed against Momo Inc. (Nasdaq: MOMO) (“Momo”) on behalf of those who purchased or otherwise acquired Momo securities between April 21, 2015 and April 29, 2019, inclusive (the “Class Period”).

Momo investors who purchased securities during the Class Period may, no later than July 15, 2019, seek to be appointed as a lead plaintiff representative of the class.

Investors who wish to discuss this securities fraud class action lawsuit or request additional information about this litigation are encouraged to contact Kessler Topaz Meltzer & Check attorneys James Maro, Jr. or Adrienne Bell at [phone] (toll free) or online at: www.ktmc.com/momo-inc-securities-class-action.

According to the complaint, Momo operates a mobile-based social and entertainment platform in the People’s Republic of China (“PRC” or “China”). The company operates the Momo platform that includes its Momo mobile application (or “app”) and various related features, functionalities, tools, and services to users, customers, and platform partners. On February 23, 2018, Momo announced that it had reached a definitive agreement with Tantan Limited (“Tantan”), a social and dating app in China, and all of its shareholders, under which Momo agreed to acquire a 100% fully diluted equity stake in Tantan for approximately 5.3 million newly issued Class A ordinary shares of Momo and US$600.9 million in cash. Momo announced the successful closing of its acquisition of Tantan on May 11, 2018.

The Class Period commences on April 21, 2015. On April 20, 2015, after market hours, Momo filed its annual report on a Form 20-F with the SEC, reporting Momo’s financial and operating results for the 2014 fiscal year.

The complaint alleges that, on June 27, 2018, Spruce Point Capital Management LLC (“Spruce Point”) issued a short seller report on Momo, recommending a “strong sell” opinion on Momo’s shares. The Spruce Point report cited, inter alia, possible compliance issues with the content of Momo’s services under relevant PRC regulations, Momo’s failure to disclose corrective action taken by Chinese authorities against one of its variable interest entities (“VIE”), and that Momo was engaged in related party transactions and illicit business dealings. According to several agencies cited throughout the Spruce Point report, Momo had a reputation for being a “sex cam” service—i.e., Momo users were using its services for illicit sexual content. The Spruce Point report also alleged that Momo had failed to disclose that China had charged Beijing Momo, one of Momo’s VIEs, with illicit financial reporting activity, which coincided with three Momo directors citing “personal reasons” for their resignation. Additionally, the Spruce Point report alleged that Momo held a minority interest “in a very popular and highly rated illegal (in China) gambling operation,” the mobile gambling app Pokermaster, via another undisclosed VIE since July 2015. Following the release of the Spruce Point report, Momo’s American Depositary Receipt (“ADR”) price fell $2.48 per share, or 5.47%, to close at $42.86 per share on June 27, 2018.