Alibaba Group Holding Ltd. has agreed to pay $433.5 million in an all-cash settlement to resolve a consolidated securities fraud class action lawsuit filed by shareholders in Manhattan federal court. The lawsuit alleged that the Chinese e-commerce giant had misled investors about its monopolistic practices and the collapse of Ant Group Co.’s initial public offering, in which Alibaba had substantial equity.
According to a settlement memo filed by the shareholders in the US District Court for the Southern District of New York, the settlement is one of the 50 largest securities class action settlements in the US since the passage of the Private Securities Litigation Reform Act of 1995. The settlement is still subject to court approval.
The lawsuit was first filed in 2020, with shareholders accusing Alibaba and two of its executives of making materially misleading statements about the planned $34.5 billion IPO for Ant Group, which is best known for its digital payment platform Alipay. The investors also alleged that Alibaba had lied about its merchants not being exclusively bound to its platform, which resulted in the company incurring a $2.8 billion antitrust penalty from Chinese regulators.
Last year, Judge George B. Daniels narrowed the case by dismissing the shareholders’ claims about the botched IPO but allowing the antitrust claims to proceed.
Alibaba has denied any fault or liability in the case and said in a regulatory filing on Friday that it entered into the settlement agreement “to avoid the cost and disruption of further litigation.” The shareholders are represented by Glancy Prongay & Murray LLP, while Alibaba is represented by Simpson Thacher & Bartlett LLP.
The case is In re Alibaba Grp. Holding Ltd. Sec. Litig., S.D.N.Y., No. 1:20-cv-09568, 10/25/24.
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