Possible Class Action Suit Against Alibaba For Disclosure Failures in issuing materially false and misleading statements regarding the soundness of company’s business operations, the strength of its financial prospects and concealing substantial ongoing regulatory scrutiny

http://www.chinatechnews.com/2015/02/02/21382-possible-class-action-suit-against-alibaba-for-disclosure-failures

Possible Class Action Suit Against Alibaba For Disclosure Failures

February 2, 2015

Alibaba and its executives may feel the sting of American jurisprudence as law firms line up for possible class action lawsuits in the United States against the Chinese e-commerce company. At least five law firms so far have expressed intentions to commence class actions against Alibaba.

For example, a complaint from Robbins Geller Rudman & Dowd LLP charges Alibaba and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the class period, Defendants issued materially false and misleading statements regarding the soundness of company’s business operations, the strength of its financial prospects and concealing substantial ongoing regulatory scrutiny. Specifically, the complaint alleges that Alibaba failed to disclose that company executives had met with China’s State Administration of Industry and Commerce in July 2014, just two months before Alibaba’s initial public offering in the United States, and that regulators had then brought to Alibaba’s attention a variety of highly dubious — and possibly illegal — business practices such as the selling of counterfeit goods.

In the IPO, Alibaba and certain “selling shareholders” sold more than 368 million ADSs at USD68 each. The complaint alleges that selling shareholders included two of Alibaba’s co-founders, Jack Ma and Joseph Tsai, each of whom sold millions of shares. The complaint also alleges that Alibaba’s ADSs continued trading at ever-increasing, artificially inflated prices.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s