State Sen. Derek Slap, D-West Hartford, and Bruno Wu, chairman of Ideanomics, are pictured at a press conference announcing the company’s proposed “Fintech Village” at the former University of Connecticut campus in West Hartford.
A class action lawsuit alleges that executives of the company proposing a $283 million “Fintech Village” in West Hartford made false and misleading statements to investors about the company’s prospects and inflated its stock price.
The complaint filed July 19 in federal court in Manhattan seeks to represent shareholders who owned stock in the company between May 15, 2017 and Nov. 13, 2018.
New York-based Ideanomics acquired the 58-acre former University of Connecticut campus last year for $5.2 million. It unveiled plans this week to build a mixed-use development on the former UConn campus.
According to the complaint, Ideanomics misled investors on costs associated with hiring its new executive team, causing the company to miss its fiscal 2018 guidance. It also states that Ideanomics’ margins in its oil trading and consumer electronics businesses were too low for those divisions to remain economically viable.
Ideanomics had predicted that it would achieve EBITDA of $35 million for fiscal 2018. On Nov. 14, it announced that it would not meet its EBITDA guidance, and shares fell nearly 49 percent to close at $1.67.
The suit names CEO Bruno Wu, former CEO Bing Yang, Chief Financial Officer Federico Tovar, former interim CFO Jason Wu and former CFO Simon Wang as defendants. The complaint was filed by New York law firm Pomerantz LLP on behalf of Maria José Pinto Claro da Fonseca Miranda, an Ideanomics shareholder.
Ideanomics, formerly known as Seven Stars Cloud, had focused on video-on-demand distribution in China before pivoting to a focus on fintech in 2017. It relocated its headquarters from Beijing to New York in 2018 but retains a small office in Beijing, according to Ideanomics’ annual report.
Ideanomics did not immediately return a request for comment on the lawsuit.
Ideanomics’ development plans in West Hartford will require approval of a new “technology village” zoning district and rezoning of the property by the Town Council. The company is expected to submit the initial rezoning language before the Town Council’s Aug. 13 meeting, and a public hearing will be scheduled in September, said Mark McGovern, West Hartford’s director of community development.
Ideanomics says the development would include multifamily housing along with office and lab space for companies in robotics, fintech, artificial intelligence and transportation industries.
At the same time, Ideanomics said it will begin an environmental cleanup of asbestos and PCB’s on the property, which contains five buildings. All but one of the buildings would be demolished to make room for the new development, Ideanomics said.
