Key Takeaways
A class-action lawsuit has been filed against ChowChow Cloud International Holdings (NYSE: CHOW) after its stock fell 84.3% on what plaintiffs allege was a market manipulation scheme.
"Chow was the subject of a market‑manipulation and fraudulent promotion scheme involving social‑media‑based misinformation and impersonators posing as financial professionals," according to the complaint filed by law firm Bronstein, Gewirtz & Grossman.
The lawsuit covers investors who bought shares between the company's initial public offering on September 16, 2025, and December 10, 2025. On the final day of that period, the stock plunged from $11.70 to close at $1.83 per share, wiping out most of its value.
The legal action puts a spotlight on the risks of social media-driven stock promotion and the responsibilities of IPO underwriters. The deadline for investors to file to be a lead plaintiff in the case is May 12, 2026.
Multiple law firms, including The Law Offices of Frank R. Cruz and The Gross Law Firm, have filed suits. They allege that following the company's IPO of 2.6 million shares at $4.00 per share, a coordinated scheme was initiated to artificially inflate the stock price.
The complaints state that the company's public statements and risk disclosures failed to mention the ongoing fraudulent trading activity. This activity allegedly involved impersonators acting as financial advisors who promoted CHOW stock in online forums and chat groups with baseless claims, creating a buying frenzy among retail investors before the price collapsed.
The lawsuits also call attention to the sole underwriter of the IPO, Tiger Securities. According to the filings, the Financial Industry Regulatory Authority (FINRA) had fined and censured Tiger Securities in April 2025 for failing to have a reasonable system in place to identify potentially suspicious deposits of low-priced securities.
The lawsuits against ChowChow Cloud highlight the vulnerability of newly-listed stocks to social media-driven manipulation. Investors will be watching for the court's decision on the lead plaintiff by the May 12, 2026 deadline, which will be the next major step in the proceedings.
This article is for informational purposes only and does not constitute investment advice.
