The US Securities and Exchange Commission (SEC) has charged Tingo Inc, a Nigerian digital commerce and FinTech company, and its CEO, Dozy Mobi, with fraud. The charges were lodged after short-seller Hindenburg Research revealed a short position in Tingo last November, expressing concerns about the company’s disclosures and corporate governance. The SEC alleges that Tingo and Mobi lied about the nature and scale of the company’s business operations, as well as its revenue and assets. They are also accused of misleading investors about a planned initial public offering (IPO) in the US.
Key points:
- The SEC has suspended trading in Tingo’s securities for ten days, and has cautioned brokers, dealers, shareholders, and prospective purchasers to carefully consider the allegations and suspension before investing.
- Hindenburg Research has not disclosed the size of its short position on Tingo. However, the company’s detailed report published in November questioned Tingo’s claim of operating Africa’s largest closed-loop agritech platform, and its reported revenues which greatly exceeded those of its publicly-traded peers.
- The SEC’s actions come amid concerns about a potential increase in foreign-listed shell companies looking to capitalise on the FinTech boom through reverse mergers.
Conclusion:
The SEC’s charges against Tingo and its CEO highlight the various risks faced by investors in the burgeoning yet potentially volatile FinTech sector. Investors are encouraged to scrutinize the claims made by companies, especially those listed in foreign markets, to avoid fraudulent schemes. The case also emphasizes the enterprising role played by short-sellers like Hindenburg Research in keeping checks on corporate behavior.
