The Law Offices of Frank R. Cruz Announces the Filing of a Securities Class Action on Behalf of X Financial Investors (XYF)
January 15 2020 - 4:49PM
Business Wire
The Law Offices of Frank R. Cruz announces that a class action
lawsuit has been filed on behalf of investors that acquired X
Financial (“X Financial” or the “Company”) (NYSE: XYF) American
Depositary Shares (“ADSs”) pursuant and/or traceable to the
Company's September 19, 2018 initial public offering (“IPO” or the
“Offering”). X Financial investors have until February 7,
2020 to file a lead plaintiff motion.
If you are a shareholder who suffered a loss, click here to
participate.
In September 2018, the Company completed its IPO selling 11.7
million ADSs at $9.50 per ADS.
On November 19, 2018, X Financial announced its third quarter
2018 financial results, reporting that its delinquency rate for
loans was 3.51%, or more than a 40% increase from the prior
quarter.
Then, on May 21, 2019, X Financial acknowledged that it was
unlikely to achieve significant loan or revenue growth because its
preferred loan business had failed over the last year and that it
would shelve the entire business.
As of November 22, 2019, X Financial’s shares have traded as low
as $1.74 per share, or 81% below the IPO price of $9.50 per
share.
The complaint filed in this class action alleges that 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 the Company's total loan
facilitation amount was not growing, but rather was contracting;
(2) that the number of investors actively using X Financial's
platform was shrinking; (3) that demand from small- and
medium-sized enterprises for the Company's preferred loans was
plummeting; (4) that the Company's preferred loans had performed so
poorly that it had begun drastically scaling back its preferred
loans in the first quarter of 2018, several months before the IPO,
and was in the process of phasing out such loans completely; (5)
that demand for the Company's card loans was also plummeting; (6)
that the revenue and loan facilitation growth provided in the
registration statement leading up to the IPO was achieved by
relaxed credit and due diligence standards, under which the Company
had underwritten tens of millions of dollars' worth of poor quality
loans that suffered from a disproportionately high risk of default
as compared to the Company's earlier loan vintages; (7) that the
Company was suffering from accelerated delinquency rates from poor
quality loans that it had underwritten in the first, second, and
third quarters of 2018, which had caused the Company's delinquency
rate to sharply rise; (8) that the Company's product mix had
significantly deteriorated; (9) that the Company's net revenue was
on track to decline by 22% during the third quarter of 2018; and
(10) that as a result, the IPO Registration Statement was
materially false and/or misleading and failed to state information
required to be stated therein.
Follow us for updates on Twitter: twitter.com/FRC_LAW.
If you purchased X Financial securities during the Class Period,
you may move the Court no later than February 7, 2020 to ask
the Court to appoint you as lead plaintiff. To be a member of the
Class you need not take any action at this time; you may retain
counsel of your choice or take no action and remain an absent
member of the Class. If you purchased X Financial securities, have
information or would like to learn more about these claims, or have
any questions concerning this announcement or your rights or
interests with respect to these matters, please contact Frank R.
Cruz, of The Law Offices of Frank R. Cruz, 1999 Avenue of the
Stars, Suite 1100, Los Angeles, California 90067 at 310-914-5007,
by email to info@frankcruzlaw.com, or visit our website at
www.frankcruzlaw.com. If you inquire by email please include your
mailing address, telephone number, and number of shares
purchased.
This press release may be considered Attorney Advertising in
some jurisdictions under the applicable law and ethical rules.
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version on businesswire.com: https://www.businesswire.com/news/home/20200115005860/en/
The Law Offices of Frank R. Cruz, Los Angeles Frank R. Cruz,
310-914-5007 fcruz@frankcruzlaw.com www.frankcruzlaw.com
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