SoundHound AI Faces Investor Class Action Lawsuit Over Financial Misconduct

2025-04-17 companies

New York City, Thursday, 17 April 2025.
SoundHound AI is under a class action lawsuit for allegedly misleading investors, which may impact its stock value and investor trust.

Allegations of Misleading Financial Statements

On March 4, 2025, SoundHound AI, Inc. (NASDAQ: SOUN) announced it would be unable to timely file its 2024 Annual Report due to complex accounting challenges associated with the SYNQ3 and Amelia Acquisitions. The company cited material weaknesses in internal financial controls as a cause for this delay, which has been a pivotal factor in the lawsuit alleging the dissemination of false and misleading financial statements that have negatively impacted investors. This announcement was followed by a sharp 5.81% drop in the company’s stock price, closing at $9.72 per share [1][2].

Further Details and Legal Proceedings

The allegations faced by SoundHound AI include overstated goodwill from the Amelia Acquisition and exaggerated remediation capabilities for its acknowledged internal control weaknesses. The outcome of this litigation, officially filed on April 14, 2025, could have significant implications for the company, affecting its operations and investor sentiment. Currently, three law firms — Wolf Haldenstein Adler Freeman & Herz LLP, Faruqi & Faruqi, LLP, and Bronstein, Gewirtz & Grossman, LLC — are at the forefront of this representation against SoundHound [1][3][4][5].

Investor Reaction and Stock Impact

This legal challenge has already begun to erode investor confidence, as reflected by a recent further decline in the stock price on April 16, 2025, closing at $7.76. Subsequent trading on April 17, 2025, saw a moderate rise to $7.82, suggesting some resilience in the market. However, with the looming May 27, 2025 deadline for investors to seek lead plaintiff status in the class action, the full impact on SoundHound’s stock remains to be seen [6][7].

Outlook for SoundHound AI

The future of SoundHound AI hinges on its ability to manage these legal challenges and rectify the highlighted accounting issues. This class action lawsuit could set a precedent for regulatory scrutiny over financial disclosures in the technology sector, emphasizing the necessity for transparent and accurate reporting practices. SoundHound has committed to responding formally to the lawsuit by May 1, 2025, a development closely watched by stakeholders and analysts alike [8][9].

Sources

class action SoundHound