SoundHound AI, Inc. (SOUN) Securities Class Action Lawsuit Update [April 24, 2025]

Introduction SoundHound AI, Inc Lawsuit

This is a shareholder alert about the SoundHound AI, Inc. class action lawsuit filed on or about March 28, 2025. The lawsuit seeks to recover damages for alleged violations of federal securities laws. Plaintiffs allege, among other claims, that SoundHound's reported goodwill following the Amelia Acquisition was inflated. The lead plaintiff deadline for this class action lawsuit is May 27, 2025. 

SoundHound is an AI-enabled speech generation and recognition software company. In 2024, it admitted it suffered “material weaknesses” in its internal controls over financial reporting. Nonetheless, SoundHound acquired two other AI voice companies and touted the value these acquisitions brought to the Company. 

However, in March 2025, SoundHound admitted it still suffered material weaknesses in its internal controls over financial reporting and these weaknesses impaired its ability to effectively account for business acquisitions. In reality, the Company overstated the acquisitions' value and the businesses acquired were worth far less than originally believed.  These failures negatively impacted SoundHound’s reported goodwill and overall assets.  

Investors reacted negatively to the news and SoundHound’s share price dropped about 6% and then 8% on two different occasions.  

SoundHound AI, Inc. (SOUN) Lawsuit Case Details 

Liles v. SoundHound AI, Inc. et al Case No. 5:25-cv-02915 

U.S. District Court, Northern District of California  

Filed on March 28, 2025 

SoundHound AI, Inc. Company Profile  

SoundHound AI develops and distributes a “conversational intelligence” platform to businesses. Its platform uses an AI-enabled speech recognition software and an AI-enabled voice assistant which assists businesses with customer service and other functions. Its customers include industries ranging from automotive, food and beverage, to consumer electronics. 

SoundHound AI, Inc. (SOUN) Lawsuit Class Period

The class period for this lawsuit is May 10, 2024 to March 3, 2025, inclusive. 

Investors who acquired SoundHound securities during the class period might be eligible for compensation. 

SoundHound AI, Inc. (SOUN) Class Action Lawsuit Allegations 

SoundHound identified ongoing material weaknesses in its internal controls going into two key acquisitions in 2024.   

In January 2024, SoundHound acquired SYNQ3, a voice AI provider in the restaurant industry. During the Company’s May 9, 2024 earnings call,  SoundHound’s Chief Financial Officer (Defendant Sharan) said this acquisition resulted in “overflowing customer activity.”   

In August 2024, SoundHound acquired Amelia Holdings, another voice AI software company. During the Company’s November 2024 earnings call, Mohajer said Soundhound was “making smart acquisitions” with its SYNQ3 and Amelia acquisitions. SoundHound claimed the SNYQ3 and Amelia acquisitions contributed to its “breakthrough year” in 2024.  

In reality, SoundHound continued to have material weaknesses throughout 2024. The Company overpaid substantially for both SYNCQ3 and Amelia and would later have to adjust its goodwill accounting for both companies, a reflection of the continued problems in SoundHound's internal controls. 

The filed complaint alleges the Company and its executives made materially false and misleading public statements about the Company's financial position and financial reporting.  The Complaint filed against SoundHound AI and its executives alleges this conduct violated federal securities laws, such as Sections 10(b) and 20(a) of the Securities Exchange Act. 

The Truth Emerges  

On March 4, 2025, SoundHound disclosed to the SEC it would be unable to timely file certain financial reports “[d]ue to the complexity of accounting for the Acquisitions.” The Company also reaffirmed “material weaknesses” which continued to exist as of the end of 2024.   

On March 11, 2025, SoundHound filed its Form 10-K. The Company admitted the lack of effective controls impaired the Company's ability to effectively account for corporate acquisitions. Because of these accounting failures, Amelia was worth substantially less than SoundHound initially suggested in the Company's public statements about the SYNCQ3 and Amelia acquisitions. Because of the foregoing material weaknesses, Soundhound adjusted downward its overall assets to effectively account for Amelia’s reduced value.  

Market Reaction to SoundHound Lawsuit

Investors reacted negatively to this news. On March 4, 2024. SoundHound’s share price fell 5.86%. SoundHound’s share price fell 8% on March 11, 2024. 

Next Steps 

• Submissions for lead plaintiff are due May 27, 2025    

• The Court will issue its order for lead plaintiff and counsel in the weeks after submissions are due.    

• The Court will then consider motion for class certification.     

• The Court will later consider a Motion to Dismiss.    

To learn whether you may be eligible for a recovery under this class action, go to the case submission page found here.