NQ Mobile Sued After Article Raises Suspicion Over Recent Business Transaction

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NQ Mobile Inc. and three executives are facing a securities lawsuit filed by a shareholder who claims the revelation of an allegedly shady business transaction caused the company’s stock prices to drop.

The transaction at issue in the lawsuit involved the sale of two NQ Mobile subsidiaries to Tongfang Investment Fund Series SPC, a deal the complaint says was announced in March 2017. The case argues that the defendants failed to disclose to investors that Tongfang was “controlled by NQ insiders.” An article published February 6, 2018 on SeekingAlpha.com, allegedly raised suspicions about the sale and surmised that NQ’s chairman and chief operating officer was “the controlling member” of Tongfang. The article labels the transaction as “highly concerning,” noting that “over half the purchase price was paid in a note receivable.” In other words, the suit alleges, the note carries “a high risk of default” and could financially harm investors in the long run.

After these allegations were published, NQ Mobile’s stock prices dropped over 44.3 percent, the case says, damaging stockholders who had purchased the company’s securities at an “inflated price” between March 30, 2017 and February 6, 2018.