- 23 June 2016
- Transport / Logistics Services
A class action against Alibaba alleging that its executives had misled potential investors about Chinese authorities interest in the site over illegal activities taking place there, has been dismissed by the New York District Court. This is in connection with the company’s recent IPO on the New York Stock Exchange.
In throwing out the case, the Court said that plaintiffs had failed to plead that Alibaba had made any actionable misstatements or omissions, or proved that the defendants sought to defraud investors.
According to the plaintiffs’ submission, they 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.
The court found that contrary to the plaintiffs’ complaints, Alibaba’s disclosures were “accurate and sufficiently candid” with regard to their description of the SAIC’s crackdown on violations of Chinese laws on e-commerce sites. It also held that the Chinese online marketplace didn’t 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, 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.