Robbins Arroyo LLP Law Firm Announces That a Yelp investor has filed a federal fraud lawsuit in the Court of the Northern District of California, in the United States.
The lawsuit alleges that the company and some of its officers and directors violated the Securities Market Law of 1934 between October 29, 2013 and April 03, 2014. Yelp describes itself as a platform that connects people with local businesses. But she is accused of make false and misleading statements with respect to customer feedback that affects your financial growth prospects.
The lawsuit alleges that Yelp did materially false and misleading statements causing the rise in share prices because:
- that comments that appear on the company's website they weren't authentic,
- the algorithms designed to detect unreliable reviews were not exhaustive, and despite our knowledge, the Company authorized these algorithms while trying to sell services designed to suppress negative reviews,
- the statements about the company, both current and future, they had no reasonable basis.
However, the company sold 1.160.910 shares at prices up to 98,99 dollars per share moving more than 81 million between November 11, 2013 and March 10, 2014.
Background
These practices start to be detected on January 7, 2014, when the Virginia Court of Appeals issued a ruling requiring that Yelp disclosed the identity of users who had written negative reviews. At this point, the stock fell.
On March 31, 2014, the Los Angeles Times published an article questioning the practice of offer customers a service to suppress negative reviews, obviously paid.
On April 2, 2014, the Federal Trade Commission had received over 2.000 complaints about Yelp, in which they echoed «fraudulent comments that defamed your fair reputation after refusing to pay Yelp for sponsorship.«
