#USA #California #Securities Fraud #Pomerantz LLP #SoundHound AI

Class Action Filed Against SoundHound AI

Recently, Pomerantz LLP announced the filing of a class action lawsuit against SoundHound AI, Inc. and certain officers, highlighting significant allegations regarding securities violations. This legal action is currently filed in the United States District Court for the Northern District of California and covers a class comprised of all individuals and entities that purchased or acquired SoundHound securities between May 10, 2024, and March 3, 2025.

The lawsuit seeks to recover damages incurred by class members in light of claims related to breaches of the federal securities laws. These claims are brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5. Investors who acquired SoundHound securities during this specified period are urged to take action to become lead plaintiffs. Details of the complaint can be found at Pomerantz's website, providing an avenue for affected individuals to seek redress.

SoundHound AI has established itself as a company providing an independent voice AI platform aimed at enhancing conversational experiences for its clients across various industries. However, the lawsuit centers on the company's alleged material weaknesses in internal control regarding its financial reporting. SoundHound has admitted to lacking adequate oversight over activities tied to these controls, particularly concerning rapid business growth and the complexity of its accounting for acquisitions.

In January 2024, SoundHound made a strategic acquisition of SYNQ3, a firm specializing in voice AI technology solutions for the restaurant sector, for a total of $15.8 million. Later, in August 2024, it acquired Amelia Holdings, Inc. for approximately $80 million—a move intended to bolster its foothold in AI solutions. Despite these acquisitions promising to enhance SoundHound’s market position in voice and conversational AI, the allegations suggest that they were accompanied by significant accounting oversights and misrepresentations.

Throughout the class action period, defendants reportedly issued false and misleading statements regarding the health and management of the company. They purportedly failed to disclose the full extent of the weaknesses in SoundHound's internal controls over financial reporting. The claims allege that these deficiencies impeded the company's ability to effectively account for corporate acquisitions, suggesting inflated reporting of goodwill associated with the Amelia acquisition which would later necessitate corrections.

On March 4, 2025, SoundHound revealed that it would not be able to file its annual report on time due to complications in accounting for the acquisitions, further admitting to the material weaknesses undermining its financial reporting controls. This disclosure resulted in a notable 5.86% decline in SoundHound's stock price the same day. Subsequently, on March 11, 2025, the company reiterated these concerns in its 2024 10-K filing, acknowledging persistent issues in its internal controls affecting its corporate accounting.

The firm Pomerantz LLP, noted for its expertise in class action litigation related to corporate and securities issues, aims to defend the rights of investors affected by these alleged misdeeds. With over 85 years of experience, they have successfully recovered substantial damages for their clients in similar circumstances.

For any investors impacted by this situation or seeking to understand their rights, more information, including the option to join the class action, is provided by the firm. They can be contacted to discuss potential involvement in the case.

In conclusion, the unfolding developments surrounding SoundHound AI serve as a reminder of the complexities of corporate governance and the importance of transparency in financial reporting. The outcome of this class action could have lasting implications for the company and its stakeholders—illustrating the critical nature of meticulous financial oversight in the fast-evolving tech landscape.