We are investigating Pareteum Corporation (TEUM) (“Pareteum” or the “Company”) for potential violations of the federal securities laws.
On June 7, 2019, Marcus Aurelius Value (“Aurelius Value”) published a report questioning Pareteum’s accounting regarding backlog, backlog conversion rates, and receivables. On this news, the Company’s stock price fell $0.83 per share, or over 24%, to close at $2.58 per share on June 7, 2019. Then, on June 25, 2019, Viceroy Research Group published a report that alleged further accounting discrepancies related to several sources of “uncollectable” revenue, concluding that Pareteum’s “total revenue is overstated by 42%.” On this news, Pareteum’s stock price fell $0.51 per share, or over 20%, to close at $2.00 per share on June 26, 2019. On October 15, 2019, Pareteum announced that Chief Operating Officer Denis McCarthy was leaving the Company. McCarthy had maintained the Company’s 36-month contractual revenue backlog spreadsheets and analysis that were scrutinized by the Aurelius Value and Viceroy reports. On this news, Pareteum’s stock price fell $0.36 per share over three consecutive trading sessions to close at $0.83 per share on October 17, 2019. Finally, on October 21, 2019, after the market closed, Pareteum disclosed that certain revenues recognized during 2018 and 2019 should not have been recorded during that period and that, as a result, the Company would restate its previously issued consolidated financial statements as of and for the full year ended December 31, 2018, and interim periods ended March 31, 2019 and June 30, 2019. On this news, Pareteum’s stock price fell $0.44 per share, or nearly 60%, to close at $0.30 per share on October 22, 2019.