• The suit alleged that cybersecurity company Arqit failed to disclose certain crucial conditions for its technology and products to function.
• The company made misrepresentations about its revenue sources when it listed on the Nasdaq, per the lawsuit. 
• Arqit agreed to pay $7 million to settle the lawsuit.

Shares of Arqit Quantum (ARQQ) are rising on Wednesday after the company settled a previously filed lawsuit against it and its directors, eliminating the burden of legal uncertainty it has faced over the last four years.

At the time of writing, ARQQ stock was up 14%, on track for an over four-month high if session gains hold, and among the top ten trending tickers on Stocktwits.

Why Was The Lawsuit Filed?

Among other things, the suit alleged that Arqit claimed to be a cybersecurity company with unique quantum encryption technology capable of staving off future cyberattacks, including those from quantum computers. However, it did not disclose factors such as the need for widespread adoption of new telecommunications protocols and infrastructure.

Arqit also claimed to have already signed major, long-term contracts for its services with large companies and government institutions before going public. But a Wall Street Journal investigation found that the company's revenue consisted of only a handful of government grants and small research contracts when it listed on the Nasdaq.

The Settlement

The company disclosed in an SEC filing on Wednesday that a federal court has approved the settlement agreement between the company, its directors, and the plaintiff who filed the case.

As part of the settlement, Arqit will pay $7 million, thereby resolving all class actions filed against it in the U.S.

The lawsuit is Robert Glick v. Arqit Quantum Inc., Case No. 1:22-cv-02604, filed in the United States District Court, Eastern District of New York on June 5, 2022.

What Do Retail Traders Think About ARQQ?

On Stocktwits, retail sentiment toward ARQQ stock turned ‘extremely bullish’ from ‘bullish’ over the last 24 hours, amid ‘extremely high’ message volumes.

ARQQ stock has fallen 3% so far this year and has declined nearly 37% over the last 12 months.

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