#United States #California #Class Action #Pomerantz LLP #SoundHound AI

Class Action Lawsuit Filed Against SoundHound AI, Inc.

On May 6, 2025, Pomerantz LLP announced that it has launched a class action lawsuit against SoundHound AI, Inc. (NASDAQ: SOUN) and certain of its officers. The suit, which is filed in the United States District Court for the Northern District of California, is designed to represent all individuals and entities (excluding the defendants) who purchased or acquired SoundHound securities during the period from May 10, 2024 to March 3, 2025. The aim of this lawsuit is to seek damages resulting from the defendants' alleged violations of federal securities laws, specifically under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

If you are an investor who has acquired SoundHound securities within this period, the deadline to contest to be appointed as Lead Plaintiff for the class is May 27, 2025. Interested parties can access the complaint directly from the Pomerantz Law Firm's website.

Background on SoundHound AI

SoundHound AI, Inc. offers an advanced voice artificial intelligence platform that aims to enhance conversational experiences for businesses across various industries. Despite its growth and intention to lead in the voice AI domain, the company has reportedly identified serious weaknesses in its internal control regarding financial reporting. SoundHound has openly admitted to lacking adequate oversight in managing activities related to these controls, particularly due to rapid business expansion.

In early January 2024, SoundHound completed a significant acquisition of SYNQ3, a voice AI company focused on the restaurant sector, for a total of $15.8 million. Additionally, in August 2024, the company announced the acquisition of Amelia Holdings, Inc. for $80 million, aiming to strengthen its portfolio in conversational AI.

Allegations against SoundHound

The class action claims that, throughout the class period, executives made materially misleading claims concerning the company’s operational health, business prospects, and acquisitions. Specifically, it is alleged that:
1. The noted weaknesses in internal controls compromised the company’s ability to accurately account for its corporate acquisitions.
2. SoundHound overstated its progress in remediating these internal control weaknesses.
3. The recorded goodwill following the Amelia acquisition was artificially inflated and required correction, leading to additional expenses to manage the complexities of accounting for the acquisitions.
4. Consequently, these oversights increased the likelihood of delayed filing of financial reports with the Securities and Exchange Commission (SEC).

On March 4, 2025, SoundHound disclosed to the SEC that it would not be able to timely file its Annual Report for 2024 due to difficulties arising from the acquisitions mentioned. Following this announcement, SoundHound's stock saw a decrease of approximately 5.86%, closing at $9.72 per share.

Company Responses

When SoundHound finally filed its 2024 Annual Report on March 11, 2025, it was detailed that the firm could not maintain effective controls necessary for accounting for certain complex transactions, further emphasizing the material weaknesses identified in its financial reporting systems. Moreover, adjustments made to correct initial accounting errors during the Amelia acquisition resulted in significant changes to the company's financial stance, decreasing previously reported figures by about $9.3 million.

Pomerantz LLP, with an extensive track record in corporate and securities class action litigation, aims to recover damages for investors impacted by the alleged misconduct of SoundHound's officers. Founded over 85 years ago, the firm is recognized as a leading advocate in protecting the rights of investors and victims of corporate malfeasance.

For those affected by SoundHound's alleged inaccuracies, it is advisable to consult legal counsel for guidance on participation in this class action lawsuit. Updates and further information can be accessed through Pomerantz Law Firm’s website, where potential class members can learn more and obtain necessary documentation.