Alibaba is facing another class-action lawsuit from U.S. stock investors, with the company’s chief executive officer Zhang Yong and chief financial officer Wu Wei suing them.
This time, the suit is filed against Chief Executive Officer Zhang Yong and Chief Financial Officer Wu Wei.
Last Friday, Ali’s U.S. stock investors have filed a New York court, alleging that the ant group in the IPO process, made materially false or misleading statements.
U.S. stock investors collectively sued Ali: Ant IPO information disclosure is inadequate
Ali plunges, US investors angry
Alibaba’s U.S. shares plunged 8 percent after investors accused Ant Group of “failing to meet listing requirements or making inadequate disclosures on certain material matters” to suspend its listing. Investors collectively suffered significant losses as the defendants’ wrongful acts and omissions sent the company’s stock price tumbling.
The class action, which also represents other investors who bought Alibaba shares between Oct. 21 and Nov. 3, is seeking compensatory damages from the defendants and could involve hundreds of thousands of investors.
Hao Junbo Law Firm in Beijing says that investors in U.S. stocks have already taken Alibaba to court. Hao Junbo, a long-time multinational securities class action lawyer, told the media that he is indeed currently preparing a class action lawsuit against Alibaba.
The reason for the class action lawsuit, of course, is that Alibaba’s wave of plummeting, so that U.S. stock investors lost a lot of money.
In late October of this year, Alibaba shares had reached a high of $319 per share.On the evening of November 3, Ant Group announced that it was suspending its IPO, and Alibaba shares then dived more than 8%, falling below the $300 mark. And by November 13, 2020, Alibaba’s stock had fallen to $260.
This isn’t the first time Alibaba has lost money in a lawsuit over U.S. stocks. The reason for the lawsuit was that the company, as well as its executive directors, needed to promise that the statements in its prospectus and all of its listing documents were true.
And that time, the attorney representing the company was also Hao Junbo Law Firm.
It can be called an injustice.
In January 2015, the former State Administration for Industry and Commerce released the “second half of 2014 network transaction goods directional monitoring results”, showing that Alibaba’s Taobao sample had the lowest authentic rate, only 37.25%.
And Ali was arguably bottom of the barrel at the time.
Taobao officials released a long microblog, bombarded the former State Administration for Industry and Commerce, the former Director General of the Department of Network Supervision Liu Hongliang violated the rules, blowing the black whistle.
On the morning of January 28, the former State Administration for Industry and Commerce (SAIC) published a “white paper”, pointing out that there are five major problems with Ali’s online trading platform. Subsequently, the former State Administration for Industry and Commerce clarified that this “white paper” has no legal effect, and quickly deleted.
The “White Paper” was seen as evidence of a lawsuit by investors in US stocks.
This lawsuit was resolved until last year. in April 2019, Ali announced that the United States federal securities law class action lawsuit to pay $ 250 million and the plaintiffs reached a settlement.
But that time, Ali “lose money does not lose mouth”, strictly speaking, there is no real sense “lose the lawsuit”, but choose to lose money settlement.
Ali said that although the U.S. local court rejected the plaintiff’s complaint in the first instance, that Ali’s disclosure of information “accurate and full and frank”, Alibaba was not found to have any illegal or inappropriate behavior, but Ali still chose to end the lawsuit with $ 250 million, because “such a long lawsuit both It does not help protect the interests of shareholders or help Alibaba focus on creating more value for society”.
Hao Junbo said that more than 99% of cases are settled by settlement, and very few are ultimately successful.
The U.S. listed companies themselves are required to buy liability insurance for key executives, which can pay out to investors and others in cases where the insurance is not illegal.
For investors, the option to settle is more beneficial.
This is because if the company loses a lawsuit, which could mean that the executive’s actions involved illegal acts, the liability insurance is no longer in effect, the insurance company refuses to pay, and the public company has to pay out on its own.
If the listed company does not have the ability to compensate, or even worse, delisted bankruptcy, then even if the case is successful, it is difficult to enforce, but investors may not get the money.
Hao Junbo believes that there is no comparison between this class action and the 2015 lawsuit. In addition, this collection of investor losses standard is not comparable to the previous RuiXiong, when RuiXiong’s collection standard was more than $1 million.
Why didn’t Hong Kong investors sue Ali?
The lawsuit law firm of Beijing Hao Junbo law firm lawyer Hao Junbo introduction, U.S. stocks, the cost of litigation is relatively low, investors do not pay fees lawyers can also go to sue, if the end can be compensated, then both the investor’s damages also have a lawyer’s fees, so there are a lot of class action lawsuits in the United States.
In Hong Kong stocks is different, lawyers can not risk agency, that is, investors must have to find their own lawyers, and according to the hour to pay, then the cost of litigation investors will be higher.
How do investors in A-share companies sue listed companies?
On 26 December 2002, the Supreme People’s Court adopted the Provisions of the Supreme People’s Court on the Trial of Civil Compensation Cases Arising from False Statements in the Securities Market.
On 31 July 2020, the Supreme People’s Court formulated the Provisions on Several Issues Concerning Representative Litigation in Securities Disputes, based on the relevant provisions of the Civil Procedure Law and the Securities Law.
Securities class action lawsuits involving investor protection agencies, through the representative mechanism, professional strength support and litigation fee waiver system, can significantly reduce the cost of rights protection and litigation risk of injured investors, which is conducive to solving the problem of difficult prosecution and expensive rights protection in the case of many scattered victims.
How should investors’ losses be recognized?
Courts around the world have adopted different standard deduction methods for measuring the extent to which an investor’s losses are affected by systemic risk, and the mainstream methods for calculating the standard deduction include the relative proportion method, the discretionary deduction method and the simultaneous comparison method.
Among them, the Relative Proportional Method is based on the percentage of increase or decrease of a reference index (usually the broader market or industry sector index) in the securities market compared to the percentage of increase or decrease of the individual stocks involved in the lawsuit. It is currently the mainstream standard, which has been widely adopted by the Supreme Court, Shandong High Court, Sichuan High Court, Changchun Intermediate Court, Fuzhou Intermediate Court and other courts.
In determining the deduction percentage in this way, most courts mainly consider the impact of the decline of the market index on the decline of individual stocks between the date of disclosure (or correction, as the case may be) and the benchmark date, i.e…
Systemic risk deduction ratio = [(benchmark date reference index – disclosure date reference index) / disclosure date reference index] / [(benchmark date share price – disclosure date share price) / disclosure date share price].
The discretionary deduction method, on the other hand, takes into account not only the impact of systematic risk on stock returns, but also the negative impact on stock prices of internal company factors other than systematic risk.
The simultaneous comparison method is a method of deducting securities market risk factors by calculating the average purchase price and investment loss difference using the moving weighted average method after the first effective purchase, and comparing the average price of individual stocks with the average value of the index for the same period.
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