Monday, January 17, 2022

Jumia now faces Class Action Lawsuits over Fraud Allegations

Jumia started really well when they first traded on the New York Stock Exchange, but hasn’t had it easy after that. Here’s a timeline of how thing have happened:

  • Jumia goes Public – Shares up 75% on First day of trading
  • People start talking on Twitter about how African Jumia is with hashtag #JumiaNotAfrican
  • Jumia CEO is quoted on CNBC saying “…in Africa there’s not enough development and developers”
  • Citron Research publishes ‘smoking gun’ calling Jumia an ‘Obvious Fraud’ and now…
  • Jumia faces a class action lawsuit over fraud

Gainey McKenna & Egleston, have announced that a class action lawsuit has been filed against Jumia Technologies AG (NYSE: JMIA) in the United States District Court for the Southern District of New York on behalf of those who purchased or acquired the securities of Jumia between April 12, 2019 through May 9, 2019, inclusive (the “Class Period”), seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder.

(The Schall Law Firm has also announced a similar lawsuit encouraging shareholders who suffered a loss to participate)

The Complaint alleges that Defendants made false and/or misleading statements and/or failed to disclose that:

  1. Jumia had materially overstated its active customers and active merchants;
  2. Jumia’s representations about its orders, order cancellations, undelivered orders and returned orders lacked a sufficient factual basis and materially overstated Jumia’s sales;
  3. Jumia failed to sufficiently disclose related party transactions;
  4. Jumia’s financial statements were presented in violation of applicable accounting standards; and
  5. as a result of the foregoing, defendants’ positive statements about Jumia’s business, operations, and prospects, were materially misleading and lacked a reasonable basis.

When the true details entered the market, the lawsuit claims that investors suffered damages.

The Citron Research paper that started all this said that over 41% of Jumia orders were returned, not delivered, or cancelled. Something Jumia failed to include in thei F-1 filing. Citron called upon a full investigation on Jumia saying that they believe more would be unearthed in such an investigation.

However, a recently published Quartz Article said the “Beverly Hills-based Citron Research is known on Wall Street for making several claims of fraud and has faced calls to be investigated. Andrew Left, Citron’s founder, has been banned from trading in Hong Kong for making claims which are “false and misleading and likely to alarm ordinary investors.””

What happens next is unclear, but we are all waiting to hear what Jumia has to say with these lawsuits. After the Citron paper scandal came out, Sacha Poignonnec, Jumia CEO, said in the above linked Quartz Article, the company is “transparent” and declined to respond directly to the claims made by Citron saying, “We don’t necessarily want to feed those types of organizations or people”.

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Dickson Otienohttps://tech-ish.com
I love reading emails when bored. I am joking. But do send them to editor@tech-ish.com.

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