China’s Cheetah Mobile Wins Dismissal of Securities Class Action

Skadden obtained a dismissal of a putative securities class action brought against Cheetah Mobile, Inc. Relying on a third-party short-seller report accusing the China-based mobile and computer applications developer of engaging in “click fraud,” the plaintiff alleged that the company’s revenues were artificially inflated and it failed to disclose that its advertising revenue was substantially based on click farms, rather than a growing user base. On June 28, Judge Manuel Real of the U.S. District Court for the Central District of California granted the company’s motion to dismiss the action in its entirety, holding that the plaintiff failed to allege particularized facts showing that Cheetah actually used click farms, and, absent such allegations, the plaintiff could not show that Cheetah’s SEC filings or press releases were false or misleading.