Pomerantz Law Firm Launches Class Action Against SoundHound AI, Inc. Following Financial Disclosures

Class Action Lawsuit Filed Against SoundHound AI

On March 31, 2025, Pomerantz LLP announced the initiation of a class action lawsuit against SoundHound AI, Inc., along with certain officers, over accusations pertaining to the company's financial disclosures. This lawsuit, filed in the United States District Court for the Northern District of California under the case number 25-cv-02915, seeks to represent all individuals and entities, excluding the defendants, who purchased SoundHound securities between May 10, 2024, and March 3, 2025. This period has been designated as the 'Class Period,' during which the lawsuit alleges violations of federal securities laws, specifically drawing upon Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as well as Rule 10b-5.

Details of the Allegations

The lawsuit outlines that investors who acquired shares of SoundHound during the specified Class Period have the right to request that the Court appoint them as Lead Plaintiff before May 27, 2025. For those who wish to understand the basis of the lawsuit or to participate, a copy of the complaint can be accessed via Pomerantz's official website.

SoundHound, known for its voice artificial intelligence platform that helps businesses create conversational experiences, has faced scrutiny over its internal controls regarding financial reporting. The company has acknowledged several material weaknesses in these controls, citing a lack of adequate oversight in its operations and challenges in managing its growth effectively. It claims that these deficiencies have hindered its ability to maintain robust financial reporting processes. Despite this admission, SoundHound has stated that it is working towards enhancing its internal controls to address these weaknesses.

In early 2024, SoundHound made significant acquisitions to enhance its service offerings, notably the purchase of SYNQ3 for $15.8 million, and later, Amelia Holdings for $80 million. The lawsuit accuses the company of misleading investors about its financial health and the impact of these acquisitions, asserting that the oversight issues have led to inflated valuations in its financial statements.

Consequences and Market Reactions

On March 4, 2025, SoundHound disclosed to the SEC that it would not be able to file its Annual Report for 2024 in a timely manner. This revelation was attributed to the complexities involved in accounting for the SYNQ3 and Amelia acquisitions and indicated ongoing weaknesses in its financial control systems. Following this announcement, SoundHound’s stock price experienced a noticeable drop, falling 5.86% to close at $9.72 per share.

Further disclosures made in its subsequent 10-K filing revealed that the company's internal control issues had impeded its ability to account effectively for atypical transactions, including acquisitions, prompting adjustments to the previously reported purchase price allocations.

About Pomerantz LLP

With a legacy spanning over 85 years, Pomerantz LLP is recognized as one of the leading law firms specializing in corporate, securities, and antitrust class litigation. Founded by Abraham L. Pomerantz, the firm has consistently advocated for the rights of those impacted by corporate malfeasance and securities fraud, recovering billions for its clients across various cases. They continue to operate from several global locations, including New York and London, and are respected for their expertise in navigating complex litigation.

For investors seeking more information or wishing to discuss their eligibility regarding this class action, they can reach out to Danielle Peyton at Pomerantz LLP.

Conclusion

This case underscores the importance of transparency and integrity in corporate governance and financial practices, particularly in fast-evolving technology sectors like AI. As more investors become aware of the implications of such weakness in internal controls, the outcomes of this class action may significantly influence corporate accountability in the tech industry.