Shares of LongFin Corp. sank 20% in premarket trade Tuesday, after the financial technology company with a focus on blockchain technology disclosed an investigation by the Securities and Exchange Commission and "material weaknesses" in its controls over financial reporting. The stock had already plummeted 80% amid a five-session losing streak through Monday, as getting dropped from the Russell 2000 index weighed. Late Monday, the company said in its 10-K filing with the Securities and Exchange Commission that it was informed on March 5 that the SEC was conducting an investigation "in the matter of trading" in LongFin securities, and requested documents related to its initial public offering in December and the acquisition of blockchain technology company Ziddu.com, which sent the shares soaring after its IPO. Separately, the company said the material weaknesses in found in its financial reporting means there is a "reasonable possibility" that a material mistatement of financial statements will not be prevented or detected on a timely basis. Among the weakness, the company said it "lacks qualified personnel who fully understand GAAP reporting requirements" and it has certain segregation of duties issues. The stock has shed 75% year to date through Monday, while bitcoin futures have shed 47% and the S&P 500 has slipped 3.4%
- Apr. 3, 2018 at 7:27 a.m. ET
- by Tomi Kilgore
