Pareteum Corporation (TEUM) Accused of Misleading Shareholders
According to the class action complaint for alleged violations of the Securities Exchange Act of 1934, in November 2015, Pareteum was on the brink of bankruptcy. Following restructuring by new management, the Company reported record revenues for every quarter in 2018 and the first two quarters in 2019, representing an increase of 730%. In all of its filings, Pareteum attested to its accuracy of financial reporting as well as the disclosures of any material changes to its control over financial reporting or fraud. As a result of this explosive growth, Pareteum’s stock quickly inflated from $1.75 to a high of $5.70, with one analyst even predicting the stock could go as high as $9.00. Then, on October 21, 2019, Pareteum revealed that it would need to restate its previously issued financial statements for full year 2018 and the first and second quarter 2019, citing improper recognition of certain revenues during that period as the reason. As a result, the Company estimated a reduction in revenue of approximately $9 million for full year 2018 and approximately $24 million for the first half of 2019, over 42% of the aggregate revenue previously recorded. On this news, Pareteum’s share price fell 59% to close at around $0.30 per share.
