Hot on the heels of rising opinions as regards Jumia’s IPO and shares on the New York Stock Exchange, Kaskela Law LLC has announced a class action lawsuit against Africa’s tech unicorn Jumia on the grounds of violation of laws governing securities exchange.
The Pennsylvania-based law firm has sued Jumia Technologies in the interest of the investors who purchased the e-tailer’s American depositary shares between April 12 and May 9, 2019.
Kaskela has requested that stock traders who fall under this category and those with losses in excess of USD 100 K join the case as lead plaintiffs.
What’s The Heat About?
In line with the complaint released, Jumia is facing no less than five accusations which they have accrued since they have controversially filed for an IPO. Upon raising USD 196 Mn, it seemed like paradise for the e-commerce marketplace, but its stocks started going under, and now it’s all fresh trouble for the company.
Kaselka law says that Jumia general presented false and misleading statements who investors who have now complained of losses on the exchange.
Of the four accusations levelled against the company, the foremost is that it had materially overstated its active customers and active merchants, something WeeTracker had reported to seem like the cause for imminent bothering.
According to the drawn lawsuit, Jumia’s representations of its orders, order cancellations, undelivered orders and returned items lacked an adequate factual basis, which implies that the company materially overstated its sales volume.
It doesn’t end there: the firm failed to sufficiently disclosed related party transactions and presented its financial statements, thus breaching established and applicable accounting standards.
When Andrew Left of Citron Research wrote and tweeted his observations regarding Jumia’s IPO, reportedly calling it a “smoking gun” and the company “a fraud”, it seemed as though his critical accusations were just opinions.
As Kaselek Law has directed that all concerned parties in the Jumia share situation report no later than July 15, 2019, the controversy is propelling to one side – maybe Jumia really did it wrong.
In what was a response to the Citron-born adversity crashing down on Jumia, South Africa’s MTN Group offloaded 10.8 percent of its stake in the company. Reducing equity from 29.7 percent to just 18.9 percent, the telco went on to announce its plans to sell half of its USD 665 Mn stake in the e-commerce company to cover its own debt.
Well, it’s not common knowledge that MTN has been looking for an open door to walk out of Jumia since 2018. But it is no longer a secret that the conglomerate has a particular, uncanny relationship with debt.
As the firm’s debt went up to USD 4.39 Bn from USD 3.94 Bn, the South African company is apparently not waiting to confirm whether the Jumia rumours are true before starting its pullout. Bloomberg reported that MTN, in desperation to acquire funds, planned to sell its entirety Jumia equity through the IPO.
Rebecca Enonchong, founder and CEO of Cameroon’s AppsTech, said that: One reason for the Jumia IPO was that German e-commerce investor Rocket Internet needed to find an exit from the loss-making company. “Even if people end up realizing it was a Rocket problem and not an African one, we will still be tainted.”
What’s Out There?
Following the short-sell company Citron’s report, Jumia’s shares declined by USD 6.22 per share or nearly 19 percent in value, to close on May 9, 2019, at USD 26.89 per share on a massive trade volume. If anything, it is the perfect time for the tech firm to speak up.
Per this accusation, Jumia CEO Sacha Poignonnec said that Jumia stands by our prospectus and audited financials…and will not be distracted by those who look to create doubt, to profit at our expense and that of our long-term stakeholders.” The French entrepreneur later took to the media and refuted the valiant report as “market rumours rather than facts.”
Rebecca Enonchong once said that Jumia cannot be considered a genuinely African company, arguing that: “If we don’t correct the notion that Jumia is an African startup and distance ourselves from them, it will hurt very badly,”
In a press release that surfaced yesterday, Los Angeles-based Schall Law Firm – a national shareholder rights litigation firm – announced that it is carrying out an investigation on behalf of Jumia investors for the violation of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by the United States Securities and Exchange Commission. While this class case is yet to be certified, it is also in response to the Citron research.
Also, New York-based Rosen Law Firm, a global investor-rights law firm, announced that it is investigating potential securities claims on behalf of shareholders of Jumia Technologies AG, which culminate from accusations that the company may have issued materially misleading investing information to the public.
The law firm, like Kakela, has also encouraged investors would have lost more than USD 100 K to make contact as the examination is ongoing.
Still sequel to the accusatory Citron report, Scott+Scott Attorneys, has begun its own investigation in NYSE: JMIA or certain of the company’s officers and directors who are reported to have violated federal securities laws. Affected investors – of any kind – have been directed to file their complaints as evidence against the African firm.
While other investigations are still underway, Jumia has plenty on its table it must handle if at all it is going to emerge through all of this unscathed. Whether it is providing a rebuttal for Citron’s claims or reassuring its investors in another legal way, the company needs to make a move in order to sidestep other African companies paying the ultimate price.
This post was originally published here