Yelp Inc won a lawsuit by shareholders saying they were misled about the authenticity and quality of its reviews, and whether Yelp manipulated those reviews to favor paying advertisers.
District Judge Jon Tigar in San Francisco said reasonable investors would understand that not all Yelp reviews are real, particularly given the company’s admission that its technology to screen user-generated content for its website is not foolproof. The judge also found no showing of an intent to defraud, including over sales by Chief Executive Jeremy Stoppelman and other insiders of tens of millions of dollars in Yelp stock at allegedly inflated prices.
Yelp users rate restaurants and other businesses. Positive reviews can spike sales and negative reviews can harm them.
Shareholders accused Yelp of inflating its share price by falsely supporting the reliability of its reviews, to extort businesses into buying ads or making payments in exchange for removing bad or fake reviews.
Source: Whistleblowerlawyernews.com
