Alibaba Faces Shareholder Suit After Debacle Over Ant Group IPO

Alibaba Group Holding Ltd. and two of its top executives were hit with a proposed class action in federal court in New York Friday by an investor who accuses them of making materially false or misleading statements in connection with the initial public offering of a company in which Alibaba acquired a 33% interest.

Laura Ciccarello sued Alibaba, CEO Daniel Zhang, and CFO Maggie Wu after an expected $34.5 billion IPO was suspended for affiliate Ant Small and Micro Financial Services Group Co. Ltd., another Chinese tech giant best known for operating the payment platform Alipay. The suspension of the IPO occurred after media reports that Ant Group executives received a “dressing down” from Chinese regulators.

The complaint further alleges that Ant Group suspended the IPO Nov. 3 and explained its decision by stating that the company “may not meet listing qualifications or disclosure requirements due to material matters” related to the Chinese meeting. Alibaba’s share price then fell $25.27, or 8%, to about $285, the complaint says.

“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the complaint said.

Causes of Action: Violation of Section 10(b) of the Exchange Act and Rule 10b-5, violation of Section 20(a) of the Exchange Act against the individual defendants.

Relief: Class certification, compensatory damages, reasonable costs and fees.

Class Size: Ciccarello seeks to represent “at least hundreds of thousands” of class members who bought or acquired Alibaba shares between Oct. 21 and Nov. 3.

Response: Alibaba didn’t immediately return Bloomberg Law’s request for comment.

Attorneys: Glancy Prongay & Murray LLP and the Law Offices of Frank R. Cruz represent the proposed class.

The case is Ciccarello v. Alibaba Group Holding Ltd., S.D.N.Y., No. 1:20-cv-09568, 11/13/20.