Sogou Inc. (SOGO) Accused of Selling Counterfeit Goods
According to the complaint against the company for alleged violations of the Securities Exchange Act of 1933 pursuant to the company’s November 9, 2017, initial public offering, Sogou Inc. (SOGO) held its IPO on November 9, 2017, and generated over $625 million in gross proceeds based on misleading offering documents. Sogou failed to disclose that Chinese regulators were analyzing Sogou for regulatory action because of an increase in sales of counterfeit goods and overall insufficient safeguards against compliance violations. In June and July 2018, Chinse media sources reported that authorities had ordered Sogou to remove illegal content from its search engines. On July 30, 2018, Sogou revised guidance for its 3Q 2018 financial results, citing an investigation by Chinese regulatory authorities and the implementation of “remedial measures,” which included a ten-day suspension of part of its advertising business. Since the truth emerged, the value of Sogou’s stock has declined over 50%.