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Fintech Firm’s Stock Drops By 30 Percent Following Announcement of SEC Investigation
Following the announcement of an investigation by the US Securities and Exchanges Commission (SEC) into is business, stock value of the fintech firm Longfin dropped by 30 percent, CNBC reported April 3.
Longfin disclosed the investigation in a public 10-K filing to the SEC on April 2. Longfin shares closed 30.89 percent lower today, trading at $9.89 a share. This year so far the stock is down by 82.43 percent.
Longfin is a NASDAQ-listed fintech company (LFIN) whose market cap skyrocketed more than 1,000 percent in two days last December following an announcement that they acquired Ziddu.com, a firm specializing in smart contracts and micro-lending using Blockchain technology.
LFIN Stock Chart Dec. 2017-April 2018
The Division of Enforcement of the SEC informed Longfin on March 5 that they would be investigating trading in the company’s shares and requested documents regarding its IPO and acquisition of Ziddu.com. Longfin expressed its full intention in cooperating with the SEC investigation in the 10-K filing:
“We are in the process of responding to this document request and will cooperate with the SEC in connection with its investigation. While the SEC is trying to determine whether there have been any violations of the federal securities laws, the investigation does not mean that the SEC has concluded that anyone has violated the law.”
Even Longfin CEO Venkat Meenavalli acknowledged the enormous spike in stock value last December, stating, “This market cap is not justified. I valued my IPO pricing at $5.” Meenavalli added, “We are a profitable company… We have nothing to do with this euphoric mania.”
In January of this year, the SEC reported it would crack down on companies that used public enthusiasm surrounding Blockchain technology to manipulate their stock prices.
Author: Cointelegraph By Aaron Wood
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