An investor filed a case against NQ Mobile Inc. Stockholder Phung Ho sought to represent shareholders who allegedly lost money after a research company revealed that the Beijing-based firm misrepresented its revenues. The complaint had to do with the securities bought by the investors on NQ Mobile's initial public offering two years ago.
According to the complaint, the research report issued on October 24 by Muddy Waters said that the mobile Internet services provider overstated and exaggerated its numbers. The research company said about 72% of NQ Mobile's China revenue was fictitious. The report said its real market share in China was only 1.5% and not 55% as the company had claimed.
When the report came out, the stock price of NQ Mobile fell 47% to USD 12.09 per share on the New York Stock Exchange. In his complaint, Ho said the investors lost USD 500 million after the stock price took a fall.
In a statement, NQ Mobile said the allegations were false and that they would quickly respond to the case.
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