Bragar Eagel & Squire, P.C. Reminds Investors That Class Action Lawsuits Have Been Filed Against Arqit, Amazon, First High-School, and Upstart and Encourages Investors to Contact the Firm
News provided byBragar Eagel & Squire
Jun 03, 2022, 9:00 PM ET
NEW YORK, June 03, 2022 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized shareholder rights law firm, reminds investors that class actions have been commenced on behalf of stockholders of Arqit Quantum, Inc. (NASDAQ: ARQQ, ARQQW), Amazon.com, Inc. (NASDAQ: AMZN), First High-School Education Group Co., Ltd. (NYSE: FHS), and Upstart Holdings, Inc. (NASDAQ: UPST). Stockholders have until the deadlines below to petition the court to serve as lead plaintiff. Additional information about each case can be found at the link provided.
Arqit Quantum, Inc. (NASDAQ: ARQQ, ARQQW)
Class Period: September 7, 2021 – April 18, 2022
Lead Plaintiff Deadline: July 5, 2022
Arqit is a cybersecurity company that purports to be developing quantum encryption technology to secure against cyber-attacks.
The Company, headquartered in London, England, went public in September 2021 when it merged with Centricus Acquisition Corp. (NASDAQ: CENH, CENHW, CENHU), a special purpose acquisition company, or SPAC.
On April 18, 2022, an article in The Wall Street Journal entitled “British Encryption Startup Arqit Overstates Its Prospects Former Staff and Others Say” raised significant issues about the Company and its prospects. The article notes that when the Company went public last fall, the Company’s Founder and Chief Executive David Williams told investors Arqit had an “impressive backlog” of revenue and was ready “for hyperscale growth.” However, the article also states that “Arqit has given investors an overly optimistic view of its future revenue and the readiness and workability of its signature encryption system, according to former employees and other people familiar with the company, and documents viewed by The Wall Street Journal.”
Following today’s news, the price of Arqit stock dropped $2.57 per share, over 17%, to close at $12.49 per share.
According to the lawsuit, defendants throughout the Class Period and in the Proxy Statement issued in connection to the Merger made false and/or misleading statements and/or failed to disclose: (1) Arqit’s proposed encryption technology would require widespread adoption of new protocols and standards of for telecommunications; (2) British cybersecurity officials questioned the viability of Arqit’s proposed encryption technology in a meeting in 2020; (3) the British government was not an Arqit customer but, rather, providing grants to Arqit; (4) Arqit had little more than an early-stage prototype of its encryption system at the time of the Merger; and (5) as a result, defendants’ statements about its business, operations, and prospects, were materially false and misleading and/or lacked a reasonable basis at all relevant times. When the true details entered the market, the lawsuit claims that investors suffered damages.
For more information on the Arqit class action go to: https://bespc.com/cases/ARQQ
Amazon.com, Inc. (NASDAQ: AMZN)
Class Period: February 1, 2019 – April 5, 2022
Lead Plaintiff Deadline: July 5, 2022
Amazon is a multinational technology company that engages primarily in the businesses of e-commerce, cloud computing, digital streaming, and artificial intelligence.
On the Company’s Amazon.com e-commerce platform, Amazon sells both third-party merchandise and Amazon’s own private-label products. As the owner and operator of the Amazon.com e-commerce platform, Amazon has access to certain non-public data of the third-party sellers that use the Amazon.com platform.
On or around June 3, 2019, the U.S. House Committee on the Judiciary initiated a bipartisan investigation into the state of competition online. The investigation, led by the Subcommittee on Antitrust, Commercial and Administrative Law (the “Subcommittee”), examined the business practices and market dominance of Facebook, Google, Apple, and, of particular relevance, Amazon (the “Subcommittee Investigation”).
In the course of the Subcommittee Investigation, the Subcommittee held several oversight hearings in which various officers of the above referenced companies, including their respective Chief Executive Officers, offered witness testimony on topics such as the effect of market power on the press, innovation, and privacy, and the market dominance of the firms under investigation. After each of the hearings, members of the Subcommittee submitted questions for the record to the witnesses.
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Amazon engaged in anticompetitive conduct in its private-label business practices, including giving Amazon products preference over those of its competitors and using third-party sellers’ non-public data to compete with them; (ii) the foregoing exposed Amazon to a heightened risk of regulatory scrutiny and/or enforcement actions; (iii) Amazon’s revenues derived from its private-label business were in part the product of impermissible conduct and thus unsustainable; and (iv) as a result, the Defendants’ public statements throughout the Class Period were materially false and/or misleading.
On March 9, 2022, media outlets reported that the House Judiciary Committee had requested that the U.S. Department of Justice open a criminal investigation into Amazon and certain of its executives for allegedly lying to Congress about its business practices during the course of the Subcommittee Investigation.
In response, Amazon asserted that there was “no factual basis” for the House Judiciary Committee’s allegations.
Then, on April 6, 2022, The Wall Street Journal published an article entitled “SEC Is Investigating How Amazon Disclosed Business Practices.” The article reported, inter alia, that the SEC’s probe has been underway for more than a year and focuses on Amazon’s disclosures regarding its use of third-party seller data for its own private-label business.
On this news, Amazon’s stock price fell $105.98 per share, or 3.2%, to close at $3,175.12 per share on April 6, 2022.
For more information on the Amazon class action go to: https://bespc.com/cases/AMZN
First High-School Education Group Co., Ltd. (NYSE: FHS)
Class Period: March 12, 2021 IPO
Lead Plaintiff Deadline: July 11, 2022
First High-School Education provides tutoring services and operates private high schools in Western China. In the week immediately prior to the IPO – from March 4, 2021 through March 11, 2021 – China held its annual “Two Sessions” parliamentary meetings, where the two main political bodies of China meet, discuss, and reveal plans for China’s policies involving the economy, military, trade, diplomacy, education, the environment, and other issues. Unbeknownst to investors until after the IPO, Chinese government leaders in attendance at the Two Sessions meetings had proposed – and ultimately adopted – stringent regulations governing the educational industry with material adverse repercussions for First High-School Education’s business, operations, and financial prospects.
Specifically, the First High-School Education class action lawsuit alleges that the IPO’s Registration Statement made inaccurate statements of material fact because defendants failed to disclose the following adverse facts that existed at the time of the IPO: (i) that the new rules, regulations, and policies to be implemented by the Chinese government following the Two Sessions parliamentary meetings were far more severe than represented to investors and posed a material adverse threat to First High-School Education and its business; (ii) that contemplated Chinese regulations and rules regarding private education were leading to a slowdown of government approval to open new educational facilities which would have a negative effect on First High-School Education’s enrollment and growth; and (iii) that, as a result, the Registration Statement’s representations regarding First High-School Education’s historical financial and operational metrics and purported market opportunities did not accurately reflect the actual business, operations, and financial results and trajectory of First High-School Education at the time of the IPO, and were materially false and misleading and lacked a factual basis.
Soon after the IPO, media reports stated that attendees of the Two Sessions conference had proposed stricter regulations to rein in the for-profit education industry, such as regulations aimed at enhancing teacher quality, limiting fee scams, reducing market abuse, and reducing the stress that for-profit educational companies had placed on students in the Chinese educational system.
On May 12, 2021, news reports revealed that the impending government crackdown on for-profit educational companies in China would be much more drastic and far reaching than previously publicly known. Sources stated that anticipated rules would include measures such as banning on-campus tutoring classes, prohibiting tutoring services during weekend hours, and the imposition of industry-wide fee limitations.
Then, on May 14, 2021, China’s state council announced rules that it would further tighten regulations on compulsory education and training institutions. According to an article on fitchratings.com titled “Legal Changes in Private Education in China: Rising Risks for K-12 Education Companies; Higher-Education Providers Benefit,” the new rules “aim to prohibit profit-making in compulsory education,” and “expose K-12 school operators to heightened regulatory risks and their revenue growth may slow . . . until they obtain more clarity on how the changes will be implemented.” Thereafter, on July 23, 2021, China unveiled a sweeping overhaul of its education sector, banning companies that teach the school curriculum from making profits, raising capital, or going public. These drastic measures effectively ended any potential growth in the for-profit tutoring sector in China.
Two months later, on September 28, 2021, First High-School Education revealed that its first half of 2021 revenue was RMB231.9 million, a year-over-year increase of only 24.8%, a steep drop from the 30.5% year-over-year revenue increase for the first nine months of 2020, and the 32.5% year-over-year revenue increase for the full year 2020. The following month, on October 13, 2021, First High-School Education issued a release announcing that its CFO, defendant Lidong Zhu, had resigned as CFO. And on December 16, 2021, First High-School Education announced that it had dismissed its auditor KPMG Huazhen LLP.
On April 5, 2022, First High-School Education announced that it had received a letter from the New York Stock Exchange (“NYSE”) stating that it was in non-compliance with the NYSE’s listing requirements because its total market capitalization and stockholders’ equity had fallen below compliance standards. The following week, on April 13, 2022, First High-School Education announced that its total revenues for 2021 were just RMB400.2 million, representing a substantial deceleration in the second half of the year. The release also stated that First High-School Education’s total student enrollment had remained almost unchanged at 21,247 students at year’s end, representing a paltry 3% increase year-over-year, and that First High-School Education’s gross profit had declined 18.1% during the year.
Finally, on May 3, 2022, First High-School Education filed a notice with the U.S. Securities and Exchange Commission that it would not be able to timely file its annual report on Form NT 20-F.
By May 10, 2022, First High-School Education ADSs closed below $1 per ADS – more than 90% below the price at which First High-School Education ADSs were sold to the investing public a little more than one year previously. At the time of the filing of this complaint, the price of First High-School Education ADSs has remained significantly below the IPO price.
For more information on the First High-School class action go to: https://bespc.com/cases/FHS
Upstart Holdings, Inc. (NASDAQ: UPST)
Class Period: March 18, 2021 – May 9, 2022
Lead Plaintiff Deadline: July 12, 2022
On May 9, 2022, after the market closed, Upstart announced its first quarter 2022 financial results in a press release. Therein, the Company reduced its fiscal 2022 guidance, expecting revenue of approximately $1.25 billion and contribution margin of 48%. During the related conference call, Upstart’s Chief Financial Officer cited “rising interest rates and rising consumer delinquencies [as] putting downward pressure on conversion.”
On this news, the Company’s stock price fell $43.52, or 56%, to close at $33.61 per share on May 10, 2022.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that Upstart’s AI model could not adequately account for macroeconomic factors such as interest rates that impact the market-clearing price for loans; (2) that, as a result, Upstart was experiencing negative impact on its conversion rate; (3) that, as a result, the Company was reasonably likely to use its balance sheet to fund loans; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis.
For more information on the Upstart class action go to: https://bespc.com/cases/UPST
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.