According to CNBC, fintech company Longfin dropped by 30 percent after the report about SEC investigation of the firm's IPO project and the legality of Ziddu.com acquisition.
The shares value of Longfin fell down by thirty percent after the US Securities and Exchange Commission (SEC) announced the investigation regarding the company's IPO and acquisition of Ziddu.com, reported CNBC on April 3, 2018.
On April 4, Longfin's shares have lost 30.89%, trading at $9.89 per share. This year, firm's shares fell down by 82.43 percent.
Longfin (LFIN) is a financial and technological company, which market capitalization grew by more than 1,000 percent in two days in December of last year. This happened after announcement that they acquired Ziddu.com. Ziddu.com is a blockchain startup, they are focused on smart contracts and microcrediting, using blockchain technology. Longfin has acquired it from the Singapore-based Meridian Enterprises in December 2017.
On March 5, 2018, The Division of Enforcement of the SEC informed Longfin that they would investigate the company stock trading, and also requested documents on firm's IPO and the acquisition of Ziddu.com. Longfin expressed its willingness to cooperate with the SEC in the "10-K" document:
“We are in the process of responding to this document request and will cooperate with the SEC in connection with its investigation. While the SEC is trying to determine whether there have been any violations of the federal securities laws, the investigation does not mean that the SEC has concluded that anyone has violated the law.”
Remind, in January 2018, the SEC announced that it would fight companies that used public enthusiasm for blockchain technology to manipulate their shares prices.
The first cause of stock dropping is the fact that the index agency FTSE Russell has excluded Longfin out of its index. The agency did not notice that Longfin has less than 2% of free float, whereas the requirement is 5% for the indexed companies. According to the Financial Times, this mistake costed $10 million for their investors, including funds under the management of BlackRock, Vanguard and Charles Schwab.