It’s been a rough week for Longfin (NASDAQ:LFIN), a finance technology company who is currently under siege by the U.S. Securities Exchange and Commission following its acquisition of Ziddu.com, a blockchain solutions provider, late last year.
Longfin’s Form 10-K filing disclosed that the SEC informed the company on March 5 that it plans to conduct an investigation and asked that Longfin provide documents related to its IPO and the financing of the Ziddu.com acquisition announced in December.
As a result of December’s acquisition, shares of Longfin skyrocketed from $5.39 to as high as $72.38 over a four-day period, representing an increase of 1,242.85 percent and resulting in the SEC’s investigation into the trading of the company’s shares.
“We are in the process of responding to this document request and will cooperate with the SEC in connection with its investigation,” Longfin said in the filing. “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.”
The company also said in the filing that it had identified material weaknesses in its internal control over financial reporting, suggesting that there is a “reasonable possibility that a material misstatement of the company’s financial statements will not be prevented or detected on a timely basis.”
In addition to the SEC investigation, multiple lawsuits against Longfin have been filed alleging the company violated federal securities laws. Rosen Law Firm, Scott+Scott Attorneys, Block & Leviton LLP, Rigrodsky & Long, and Wolf Haldenstein are just a handful of law firms who have announced investigations into Longfin this week alone.
Unsurprisingly, shares of Longfin have taken a turn for the worse this week, dropping 28.8 percent from $16.28 on Monday (April 2) to $11.58 as of Wednesday’s (April 4) close. Year-to-date, shares of the company have slid 79.82 percent.
Tradingview.com currently ranks Longfin as a “sell” based off 22 analyst ratings, with 12 ranking the company as a “sell.”
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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.