US-based law firm, Scott+Scott Attorneys at Law LLP, an international shareholder and consumer rights litigation firm, has filed a securities class action lawsuit against the Chennai-based Freshworks Inc. alleging violations of the Securities Act of 1933.
According to the complaint filed in the US District of California, Northern District and captioned Sundaram v. Freshworks, the offer documents used to effectuate Freshworks’ IPO were false and misleading and omitted to state that, at the time of the offering, the company’s business had encountered obstacles. As a result, Freshworks’ net dollar retention rate was plateauing, and its revenue growth rate and billings were decelerating, says a release issued by the law firm through Global Newswire.
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The Nasdaq-listed Freshworks provides customer engagement software for businesses. In September 2021, Freshworks came out with its IPO, offering 28.5 million shares of its common stock to the investing public at a price of $36 per share (offer price).
As the truth about the company’s business reached the market, the value of its shares declined dramatically, causing Freshworks investors to suffer significant damages. Indeed, by the commencement of the action, Freshworks’ shares traded as low as $10.51 per share, representing a decline of over 70 per cent from the offering price, the release said.
The share price of Freshworks on Wednesday closed at $12.24, down by 6.99 per cent.
A response from Freshworks is awaited.
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Published on November 3, 2022
