Priya Patel
Chinese e-commerce giant Alibaba is urging a New York federal court to deny class certification in a shareholder lawsuit that accuses the company of failing to disclose regulatory risks in the lead-up to its fintech affiliate Ant Group’s initial public offering. Alibaba argues that the practices in question were not hidden and did not affect share prices. The lawsuit alleges that Alibaba withheld information about a Chinese antitrust investigation into its business practices, which eventually led to the suspension of Ant Group’s IPO.
The lawsuit was filed by shareholders who purchased Alibaba shares between October 2020 and February 2021, before the IPO was suspended. The shareholders claim that they suffered financial losses due to the company’s failure to disclose the investigation. They are seeking class certification to represent all investors who purchased Alibaba shares during the specified time period.
Alibaba argues that the lawsuit lacks merit and should not be granted class certification. The company points out that it publicly disclosed the antitrust investigation in its annual report and other filings, and that the investigation was widely reported in the media. Alibaba also argues that the investigation did not have a material impact on the company’s share prices, as the stock continued to trade at a high valuation even after the investigation was disclosed.
The outcome of this lawsuit could have significant implications for Alibaba and other Chinese companies listed in the U.S. Investors are increasingly concerned about the risks of investing in Chinese companies, particularly in light of the regulatory crackdown by the Chinese government on tech giants like Alibaba and Tencent. The lawsuit highlights the importance of transparency and disclosure in the IPO process, and raises questions about whether investors were adequately informed about the risks associated with Ant Group’s IPO.
