(CN) – Cheetah Mobile Inc. faces a shareholder class action after the company allegedly engaged in an ad fraud scheme that caused the Google Play store to remove the company's apps.
The suit was filed in the U.S. District Court of New York against Cheetah, CEO Sheng Fu and several financial officers on behalf of investors who purchased Cheetah stock between April 21, 2015 and November 27, 2018.
According to the lawsuit, Cheetah has millions of active users through its mobile products such as Clean Master and Cheetah Keyboard and games including Piano Tiles 2, Bricks n Balls and a live streaming product called Live Me.
“Cheetah’s apps have been downloaded over 2 billion times since they were launched beginning in September 2011,” the complaint states, adding that some of Cheetah’s apps were the most popular in the Google Play store.
The lawsuit alleges that over the three year period, Cheetah neglected to tell investors that the company’s apps contained undisclosed embedded features that tracked when users downloaded other apps and that Cheetah purportedly used this data to falsely take credit for having caused the downloads.
The suit alleges that revenues reported by Cheetah during the period were a part of the fraud and unsustainable, and that the company downplayed the importance of the Google Play store as a means of distribution for its products. On November 26, 2018 after a Buzzfeed News article reported that certain Cheetah apps were removed from the Google Play store due to the alleged fraud, the company’s stock price nearly 37 percent to close at $5.48 on November 27.
The class is represented by Jeremy A. Lieberman, J. Alexander Hood II and Jonathan D. Lindenfeld of Pomerantz LLP in New York and Patrick V. Dahlstrom in Chicago.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.