The Klein Law Firm announces that a class action complaint has been filed on behalf of shareholders of X Financial (NYSE: XYF) who purchased or otherwise acquired X Financial American Depositary Shares pursuant and/or traceable to the Company’s September 19, 2018 initial public offering. The action, which was filed in the United States District Court for the Eastern District of New York, alleges that the Company violated federal securities laws.
In particular, the X Financial lawsuit alleges that (i) the Company’s total loan facilitation amount was not growing, but rather was contracting; (ii) the number of investors actively using X Financial’s platform was shrinking; (iii) demand from small- and medium-sized enterprises for the Company’s preferred loans was plummeting; (iv) the Company’s preferred loans had performed so poorly that it had begun drastically scaling back its preferred loans in the first quarter of 2018, several months before the initial public offering (“IPO”), and was in the process of phasing out such loans completely; (v) demand for the Company’s card loans was also plummeting; (vi) the revenue and loan facilitation growth provided in the registration statement leading up to the IPO was achieved by relaxed credit and due diligence standards, under which the Company had underwritten tens of millions of dollars’ worth of poor quality loans that suffered from a disproportionately high risk of default as compared to the Company’s earlier loan vintages; (vii) the Company was suffering from accelerated delinquency rates from poor quality loans that it had underwritten in the first, second, and third quarters of 2018, which had caused the Company’s delinquency rate to sharply rise; (viii) the Company’s product mix had significantly deteriorated; (ix) the Company’s net revenue was on track to decline by 22% during the third quarter of 2018; and (x) as a result, the Registration Statement was materially false and/or misleading and failed to state information required to be stated therein.
Shareholders have until February 7, 2020 to petition the court for lead plaintiff status. Your ability to share in any recovery does not require that you serve as lead plaintiff. You may choose to be an absent class member.
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