Chinese e-commerce giant Alibaba informed the U.S. Securities and Exchange Commission on Monday that it has entered a settlement agreement to resolve a class action lawsuit that was initiated in early 2015.
The company and some of its former and current executives were involved in seven lawsuits between January and February 2015 after a white paper was posted in January 2015 on China’s State Administration for Industry and Commerce website that referred to a meeting between Alibaba and the country’s regulators in July 2014.
Plaintiffs in these lawsuits alleged that Alibaba failed to disclose information about this meeting, which were held two months before the company’s initial public offering in the United States. They believe information in this white paper show that Alibaba was subject to “administrative guidance law enforcement“—language that suggests the company may need to alter its actions—from certain regulators in China.
The class action lawsuit was put forward on behalf of all Alibaba investors who purchased Alibaba’s American depositary shares (ADS), purchased call options, or sold put options on Alibaba ADS between September 19, 2014, the company’s first trading day on the New York Stock Exchange, and January 28, 2015.
The white paper, which the administration later said had no legal effect, was removed within one day.
On Friday, the defendants agreed to pay USD 250 million to settle the federal action, according to the filing.
“We are glad to have this matter behind us. Prolonged litigation is neither conducive to protecting the interest of our shareholders, nor does it help Alibaba to focus on creating more value for society,” an Alibaba spokesperson told KrASIA on Friday.
Contact the writer at jingli@kr-asia.com
