Alibaba to pay $250m to settle lawsuit over pre-IPO warning on counterfeiting

Alibaba Group Holding Ltd mentioned on Monday it’s going to pay $250 million to settle a US lawsuit faulting the Chinese language e-commerce firm for concealing a regulatory warning about its capability to cease counterfeiting earlier than it went public in 2014.
The lawsuit accused Alibaba of securities fraud for failing to reveal it had met with China’s State Administration for Business and Commerce on July 16, 2014, two months earlier than the corporate’s $25 billion preliminary public providing.
Alibaba’s American Depositary Shares slid 12.eight per cent on Jan 28-29, 2015, after the SAIC issued a white paper primarily based on issues raised on the assembly, saying many merchandise bought on Alibaba web sites have been faux or infringed logos.
The white paper additionally mentioned the SAIC delayed releasing its findings so the IPO wouldn’t be affected.
Monday’s proposed class-action settlement covers buyers in Alibaba ADS and ADS choices within the 4-1/2 months previous the discharge of the white paper, which was later withdrawn. The accord, which requires court docket approval, additionally resolves claims in opposition to Alibaba officers together with billionaire founder and Government Chairman Jack Ma.
Alibaba denied wrongdoing. It mentioned the settlement ends all pending securities litigation in opposition to the corporate, its govt officers and its administrators.
In court docket papers, the plaintiffs’ attorneys referred to as the accord “inherently truthful, affordable, and sufficient,” citing potential hurdles in displaying that Alibaba made false statements and supposed to commit fraud.
The attorneys might search as much as 25computer of the settlement fund for authorized charges, the papers present. They didn’t instantly reply to requests for extra remark.
The Chinese language firm has lengthy confronted accusations that its on-line platforms are a haven for counterfeiters, together with in lawsuits by luxurious manufacturers comparable to Gucci and Yves Saint Laurent.
Alibaba, Amazon.com Inc, eBay Inc and different such corporations have insurance policies banning counterfeiting, and highlighted their investments to thwart the apply.
On April 3, US President Donald Trump ordered a crackdown on on-line counterfeiting, saying international transactions in faux and pirated items may attain $500bn yearly.
The case is In re Alibaba Group Holding Restricted Securities Litigation, US District Courtroom, Southern District of New York, No. 15-md-02631.