Ideanomics, Inc. (IDEX) Accused of Misleading Investors
According to the complaint against the company for alleged violations of the Securities Exchange Act of 1934 between May 15, 2017 and November 13, 2018, in January 2017, Ideanomics, Inc. (IDEX) acquired two Hong Kong companies. Following these acquisitions and throughout the relevant period, Ideanomics issued a series of press releases and filings with the SEC that touted the company’s revenue growth, mainly attributing the large increase to the acquisitions and its Wecast Services Group. However, these misleading statements failed to disclose that margins in its consumer electronics and oil trading businesses were actually too low to remain viable and Ideanomics was very unlikely to meet its 2018 EBITDA guidance. This material information was finally revealed in a November 2018 press release that stated Ideanomics’ intention to “phase out oil trading and consumer electronics businesses” and that it ” not anticipate meeting EBITDA guidance.” On this news, Ideanomics’ stock price fell $1.59, or 48.77%. The stock has yet to recover and currently trades at $1.78.