Eros International Plc

On June 5, 2019, the Company’s Indian subsidiary’s credit rating was downgraded to “Default” by India’s second largest credit ratings agency over concerns of “ongoing delays/default in debt servicing due to slowdown in collection from debtors.”

On this news, the Company’s share price fell $3.59, or nearly 49%, to close at $3.71 on June 6, 2019, thereby injuring investors.

Then, on June 7, 2019, an article published by Hindenburg Research explained that the reason for the credit downgrade was due to “multiple undisclosed related-party transactions that appear designed to hide receivables”, and that “a significant portion of Eros’s receivables don’t exist.”

On this news, the Company’s share price fell an additional $0.41, or nearly 12%, to close at $3.30 on June 7, 2019, thereby further injuring investors.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) Eros and its executives engaged in a scheme to use related-party transactions to fabricate receivables that they reported in Eros’s public financial disclosures; (2) because of this scheme, Eros’s financial position was weaker than what the Company disclosed; (3) consequently, the Company’s Indian subsidiary, Eros International Media Ltd (“EIML”), missed loan payments and had its credit downgraded; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.