NQ Mobile under US probe over false information

Summary:Under investigation for violating U.S. securities laws, the Chinese mobile security company is alleged to have inflated its user base by at least 10 times and provided false financial statements.

A U.S. law firm is investigating Chinese mobile security company, NQ Mobile, over allegations it violated U.S. securities law by making "materially false and misleading statements" regarding its business.

In a statement Monday, Bronstein, Gewirtz & Grossman said it was working on behalf of purchasers of the securities of NQ Mobile, which was formerly called NetQin. Its investigation will focus on whether NQ Mobile overstated its revenue by inflating its user base by at least 10 times, which led to its financial statements being materially false and misleading at all relevant times, said the corporate litigation law firm.

It said the investigation was sparked by a Seeking Alpha article posted on Dec. 10 which claimed NQ Mobile overstated its industry position with its "user base has been inflated more than 10-fold". The article has since been taken down from the U.S. stock market news site.

NQ Mobile rejected the claims in a statement dated Dec. 11, citing a Sino MR report which said the Chinese security vendor had 63 percent of registered mobile security users in China in the third quarter.

NQ Mobile was involved in another scandal in March 2011 when reports said it deliberately infected smartphones with malware before charging users a fee to eradicate the virus. The company, though, deined any wrongdoing. 

Topics: Security, China, Legal

About

The only journalist in the team without a Western name, Yun Qing hails from the mountainy Malaysian state, Sabah. She currently covers the hardware and networking beats, as well as everything else that falls into her lap, at ZDNet Asia. Her RSS feed includes tech news sites and most of the Cheezburger network. She is also a cheapskate mas... Full Bio

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