A class action lawsuit was filed against SoundHound AI (SOUN) by Levi & Korsinsky on March 28, 2025. The plaintiffs (shareholders) alleged that they bought SOUN stock at artificially inflated prices between May 10, 2024 and March 3, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought SoundHound AI stock during that period can click here to learn about joining the lawsuit.

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SoundHound AI is a conversational intelligence company, offering artificial intelligence (AI) powered voice solutions. SoundHound’s voice AI solutions support multiple languages and enable businesses to deliver meaningful conversational experiences to their customers.

SoundHound says it facilitates billions of interactions annually through its wide product range including Smart Answering, Smart Ordering, Dynamic Interaction, and SoundHound Chat AI.

The company’s inadequate internal controls over financial reporting and the resulting financial implications are at the heart of the current complaint.

SoundHound AI’s Misleading Claims

According to the lawsuit, SoundHound AI and two of its senior officers (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about weaknesses in the Company’s internal controls over financial reporting, and SoundHound’s ability to account for corporate acquisitions, from SEC filings and related material.

For instance, during the Class Period, the CFO and CEO highlighted the strategic importance of acquiring SYNQ3, a restaurant tech platform, and conversational AI leader, Amelia Holdings. Both acquisitions offered solid synergistic opportunities and were expected to accelerate SoundHound AI’s voice AI capabilities.

During a November 12, 2024 earnings call, the CEO expressed confidence in the company’s AI agent customer service portfolio. The company was winning new logos/clients organically, expanding offerings to existing customers, and growing its ecosystem of partners through smart acquisitions.

However, subsequent events (discussed below) revealed that SoundHound AI had misled investors about its financial reporting practices.

Plaintiffs’ Arguments

The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors regarding the company’s ability to account for corporate acquisitions.

Story Continues

The information became clear through a series of events leading up to March 4, 2025, when the company filed a NT 10-K filing with the SEC. In this filing, SoundHound noted that it required additional time to report its regular 10-K filing, due to the complexity of accounting for the two acquisitions mentioned above. The company also acknowledged that it had identified material weaknesses in its internal control over financial reporting. Following the news, SOUN stock fell 5.9% the same day.

On March 11, the company filed its regular Fiscal 2024 annual report with the SEC. In this filing, it accepted failure to design and maintain effective controls for identification and accounting of “certain non-routine, unusual or complex transactions, including the accounting for complex financing transactions and acquisitions.” Accordingly, SoundHound AI recorded adjustments to the reported goodwill figure for its Amelia acquisition, which ultimately impacted its financial performance.

To conclude, the defendants allegedly misled investors regarding their failure to incorporate adequate internal controls over financial reporting. Owing to these issues, SOUN stock lost 43.3% so far this year, causing massive damage to shareholder returns.

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