Innodata Inc. (INOD) Falls 30% on Claims of “AI Washing,” Then Hit With Securities Class Action – Hagens Berman

SAN FRANCISCO, March 21, 2024 (GLOBE NEWSWIRE) -- Hagens Berman urges Innodata Inc. (NASDAQ: INOD) investors who suffered substantial losses to submit your losses now.

Innodata Inc. (INOD) Securities Fraud Class Action:

The litigation challenges Innodata’s claims about its AI technology and Goldengate platform, which the company calls a “proprietary, state-of-the-art” “core AI technology stack.”

The complaint alleges that Innodata misrepresented and failed to disclose that: (1) Innodata did not have a viable AI technology; (2) its Goldengate AI platform is a rudimentary software developed by just a handful of employees; (3) it was not going to utilize AI to any significant degree for new Silicon Valley contracts; and (4) it was not effectively investing in research and development for AI.

The truth emerged on Feb. 15, 2024, when activist short seller Wolfpack Research published a report, “Exposing INOD’s ‘Smoke and Mirrors’ AI,” concluding that IPOD “is a manually data-entry business driven by offshore labor, not innovation.”

Wolfpack observed that Innodata’s business is “deteriorating,” and reported that a former employee said about the company’s claims concerning AI that “management was ‘putting lipstick on a pig.’” Wolfpack said that, while Innodata purports to be supporting generative AI with four of the five biggest tech companies in the world, “[w]e think this is grossly misleading; INOD has a large offshore labor force that specializes in basic data annotation, what a former high-level employee has described as ‘banging away on keyboards.’”

As to Goldengate, Wolfpack said, “our analysis indicates Goldengate is a rudimentary software developed by just a handful of employees” and “a former employee told us that potential customers would trial Goldengate for free, but these trials didn’t convert to sales because results were horrible.”

This news sent the price of Innodata shares crashing 30% lower on Feb. 15, 2024.

“We’re investigating whether Innodata may have made false and misleading claims about the use of AI in their platforms,” said Reed Kathrein, the Hagens Berman partner leading the firm’s investigation.

If you invested in Innodata and have substantial losses, or have knowledge that may assist the firm’s investigation, submit your losses now »

If you’d like more information and answers to frequently asked questions about the Innodata case and our investigation, read more »

Whistleblowers: Persons with non-public information regarding Innodata should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].

About Hagens Berman
Hagens Berman is a global plaintiffs’ rights complex litigation law firm focusing on corporate accountability through class-action law. The firm is home to a robust securities litigation practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and fraud. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw. 

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Contact:
Reed Kathrein, 844-916-0895