New York District Court dismisses class action lawsuit against Alibaba
The U.S. District Court for the Southern District of New York dismissed a class action lawsuit brought against Alibaba and some of its executives about disclosures made in connection with the company’s initial public offering (IPO). The Court ruled that the plaintiffs had failed to plead that Alibaba made any actionable misstatements or omissions, and also failed to plead facts sufficient to show that any of the defendants sought to defraud investors.
The plaintiffs alleged that Alibaba’s Registration Statement, IPO prospectus, and various other public statements, were false and misleading because they failed to disclose heightened regulatory scrutiny by the Chinese State Administration for Industry and Commerce (SAIC) prior to the company’s IPO.
Contrary to the plaintiff’s complaint, the Court found Alibaba’s disclosures to be “accurate and sufficiently candid” with regard to their description of the SAIC’s crackdown on violations of Chinese laws on e-commerce sites. The Court also held that Alibaba did not downplay the problem of counterfeit sales on its platforms or the likelihood of an administrative action with respect to such issue.
In a statement issued yesterday (22 June), Alibaba said that it was “pleased that the judge in the Southern District of New York has dismissed the litigation and concluded that Plaintiffs have failed to state any claim for violation of the U.S. securities laws”.
The lawsuits are docketed under the master caption Christine Asia Co., Ltd. et al. v. Alibaba Group Holding Limited et al., No. 1:15-md-02631-CM (S.D.N.Y.) in the Southern District of New York.
