Sogou class action suit cites counterfeit problems

Search engine firm Sogou is facing a class action lawsuit from investors who claim it failed to disclose serious regulatory issues when it listed in the US.

The Chinese company listed on the New York Stock Exchange (NYSE) in November 2017 and according to the plaintiffs in the case it failed to reveal in its Initial Public Offering (IPO) prospectus that it was under investigation by the Chinese authorities “because of an increase in Sogou merchants’ sales of counterfeit goods.”

The complaint alleges that “Chinese regulators were analysing Sogou for regulatory action because Sogou’s existing software, advertising procedures, personnel, and audit procedures were insufficient to safeguard against compliance violations with governing Chinese regulations.”

It says Sogou failed to disclose that its systems would need to be “updated, enhanced, and strengthened,”  resulting in increased expenses.