Pomerantz Law Firm Initiates Class Action Against SoundHound AI, Inc. for Securities Fraud Allegations
In a significant legal development, the Pomerantz Law Firm announced the initiation of a class action lawsuit against SoundHound AI, Inc. and several of its executives. Filed in the United States District Court for the Northern District of California, this lawsuit seeks to represent all individuals and entities who purchased or acquired SoundHound securities between May 10, 2024, and March 3, 2025. The complaint aims to recover damages attributed to alleged violations of federal securities laws under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alongside Rule 10b-5 imposed by the Securities and Exchange Commission (SEC).
This class action arises from what Pomerantz describes as significant material weaknesses in SoundHound’s internal controls regarding financial reporting. These deficiencies have reportedly hampered the company's ability to effectively manage its accounting practices and the reporting of acquisitions. SoundHound, known for providing an independent voice AI platform aimed at enhancing customer interactions across various industries, has faced scrutiny over its financial governance practices.
Throughout the specified Class Period, the lawsuit alleges that SoundHound and certain officers made materially misleading statements regarding the company's operational health and growth trajectories. Specifically, the complaint contends that executives failed to disclose critical information concerning the firm’s internal controls. It has been argued that these oversights directly impacted SoundHound's capacity to accurately account for its acquisitions, including the notable acquisitions of SYNQ3 and Amelia, which occurred within this timeframe.
As part of its acquisition strategy, SoundHound acquired SYNQ3, a specialist in voice AI technology for restaurants, for a total of $15.8 million in January 2024. Following this, the company further expanded its portfolio with the acquisition of Amelia Holdings, Inc.—a provider of conversational AI software—under a total purchase consideration of $80 million, which included cash, equity, and the assumption of Amelia's debts.
Despite the promising nature of these strategic acquisitions, the complaint posits that SoundHound's pre-acquisition public statements regarding the strength of its internal controls were not just misleading but substantially false. Investors were reportedly misled into believing that SoundHound was adequately equipped to handle the accounting complexities involving these acquisitions. The lawsuit further alleges that the company overestimated its remedial measures for its internal control weaknesses, known to hinder the accurate accounting for corporate transactions.
On March 4, 2025, SoundHound publicly revealed its inability to file its Annual Report for 2024 due to the heightened complexities surrounding these acquisitions. This disclosure triggered an immediate negative reaction in the stock market, causing SoundHound's share price to drop by nearly 6%. Approximately one week later, the company provided a more thorough explanation in its 2024 10-K filing, admitting for the first time that their lack of effective controls had materially impacted their reporting and accounting practices concerning recent acquisitions.
The Pomerantz Law Firm is encouraging all investors who acquired SoundHound securities during the Class Period to come forward and assert their rights. Interested individuals are advised to make contact with the firm by May 27, 2025, to engage in the proceedings and seek the appointment as Lead Plaintiff for the class.
The Pomerantz firm is renowned for its long history of representing investors in securities fraud and antitrust class actions, having recovered billions in damages over the years. Founded by the late Abraham L. Pomerantz, the firm continues his legacy, aggressively pursuing justice for victims of corporate misconduct.
If you believe you have a standing interest in this case or if you were affected by the financial practices of SoundHound AI, you are encouraged to reach out to Pomerantz LLP for further guidance and to discuss your possible involvement in the class action lawsuit. For inquiries, you can contact Danielle Peyton at Pomerantz LLP via email or phone, as detailed in their public announcement.
This class action arises from what Pomerantz describes as significant material weaknesses in SoundHound’s internal controls regarding financial reporting. These deficiencies have reportedly hampered the company's ability to effectively manage its accounting practices and the reporting of acquisitions. SoundHound, known for providing an independent voice AI platform aimed at enhancing customer interactions across various industries, has faced scrutiny over its financial governance practices.
Throughout the specified Class Period, the lawsuit alleges that SoundHound and certain officers made materially misleading statements regarding the company's operational health and growth trajectories. Specifically, the complaint contends that executives failed to disclose critical information concerning the firm’s internal controls. It has been argued that these oversights directly impacted SoundHound's capacity to accurately account for its acquisitions, including the notable acquisitions of SYNQ3 and Amelia, which occurred within this timeframe.
As part of its acquisition strategy, SoundHound acquired SYNQ3, a specialist in voice AI technology for restaurants, for a total of $15.8 million in January 2024. Following this, the company further expanded its portfolio with the acquisition of Amelia Holdings, Inc.—a provider of conversational AI software—under a total purchase consideration of $80 million, which included cash, equity, and the assumption of Amelia's debts.
Despite the promising nature of these strategic acquisitions, the complaint posits that SoundHound's pre-acquisition public statements regarding the strength of its internal controls were not just misleading but substantially false. Investors were reportedly misled into believing that SoundHound was adequately equipped to handle the accounting complexities involving these acquisitions. The lawsuit further alleges that the company overestimated its remedial measures for its internal control weaknesses, known to hinder the accurate accounting for corporate transactions.
On March 4, 2025, SoundHound publicly revealed its inability to file its Annual Report for 2024 due to the heightened complexities surrounding these acquisitions. This disclosure triggered an immediate negative reaction in the stock market, causing SoundHound's share price to drop by nearly 6%. Approximately one week later, the company provided a more thorough explanation in its 2024 10-K filing, admitting for the first time that their lack of effective controls had materially impacted their reporting and accounting practices concerning recent acquisitions.
The Pomerantz Law Firm is encouraging all investors who acquired SoundHound securities during the Class Period to come forward and assert their rights. Interested individuals are advised to make contact with the firm by May 27, 2025, to engage in the proceedings and seek the appointment as Lead Plaintiff for the class.
The Pomerantz firm is renowned for its long history of representing investors in securities fraud and antitrust class actions, having recovered billions in damages over the years. Founded by the late Abraham L. Pomerantz, the firm continues his legacy, aggressively pursuing justice for victims of corporate misconduct.
If you believe you have a standing interest in this case or if you were affected by the financial practices of SoundHound AI, you are encouraged to reach out to Pomerantz LLP for further guidance and to discuss your possible involvement in the class action lawsuit. For inquiries, you can contact Danielle Peyton at Pomerantz LLP via email or phone, as detailed in their public announcement.
Topics Financial Services & Investing）
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