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After the news emerged last week that Chinese cybersecurity regulators had cracked down on the ride-sharing firm DiDi Global shortly after the company completed its U.S. IPO, the company was hit with a U.S. securities class action lawsuit. However, DiDi was not the only Chinese company that recently completed a U.S. IPO that was targeted by the Chinese regulator. Two other Chinese companies that completed U.S. IPOs in June – Full Truck Alliance Co. Ltd. and Kanshun Limited – were both also notified that their companies were under review by the cybersecurity regulator. And now both of these companies have also been hit with U.S. securities class action lawsuits, as discussed below.
Continue Reading Two More Chinese Companies Hit with U.S. Securities Suits Following Post-IPO Crackdown by Chinese Regulator

On July 6, 2021, after the Wall Street Journal reported that prior to DiDi’s June 30, 2021 U.S. IPO,  government authorities had urged the Chinese ride-hailing firm to postpone the offering, but that the company, under pressure from investors, had gone ahead with the IPO anyway, it seemed that it would only be a matter of time before DiDi would be hit with a U.S. securities lawsuit. Indeed, as it turned out, the same day the Journal article appeared, an investor filed a U.S. securities class action lawsuit against the company. As discussed below, the lawsuit is based on cybersecurity and privacy concerns relating to the company’s ride-hailing app. A copy of the investor’s July 6, 2021 complaint can be found here.
Continue Reading Chinese Ride-Hailing Firm DiDi Hit With Securities Suit Related to Its Recent IPO

One of the more interesting developments in recent years has been the global rise of collective procedural mechanisms for aggrieved investors to seek redress from corporate parties for disclosure misrepresentations or omissions. In that vein, the recent revision of the securities laws of the People’s Republic of China are particularly interesting.

As discussed in a recent memo from AIG, presented in conjunction with the Shanghai-based JunHe law firm, the revised Chinese securities laws include among many other changes new provisions allowing for collective investor actions. According to the AIG memo, entitled “Securities Class Actions under the New Securities Law in China” (here), the revised law introduces “western-style class actions to China.”
Continue Reading Chinese Securities Law Revision Introduces “Western-Style Securities Class Actions”

In the latest sign that coronavirus-related securities class action lawsuit filings will continue into the New Year, on January 20, 2021, a plaintiff shareholder filed a COVID-19-related securities suit against the Chinese Internet social media company Lizhi, Inc. The lawsuit relates to the coronavirus outbreak now more than a year ago in China, and to the company’s January 2020 U.S. IPO. A copy of the plaintiff’s complaint can be found here.
Continue Reading Chinese Social Media Company Hit with Coronavirus-Related Securities Suit

When I heard that moves by Chinese financial regulators had forced the Shangahi securities market to suspend Ant Group’s massive planned IPO, my first thought was that, if the offering had been planned for the U.S. the called halt to the offering might well give rise to a “failure to launch” claim. However, since Ant Group’s IPO was planned for the Shanghai and Hong Kong exchanges, the possibility of a claim seemed remote. As it has turned out, however, a failure to launch claim has been filed in the U.S. after all, with the added twist that the corporate defendant in the lawsuit is not Ant Group itself, but instead it is Alibaba, the U.S.-listed Chinese Internet commerce company that owns 33% of Ant Group’s equity interest. As discussed below, the new lawsuit against Alibaba has a number of interesting features.
Continue Reading Ant Group’s Scrubbed IPO Triggers U.S. Failure to Launch Claim Against Alibaba

When the U.S. Senate recently passed legislation that would bar access to U.S. securities exchanges to any foreign company whose auditor is not subject to the same regulatory inspections as domestic U.S. companies, it was the culmination of a series of moves by regulators, market authorities, and legislators to try to “level the playing field” and subject the foreign companies to the same scrutiny U.S. companies and their auditors face. The recently passed Senate legislation, Senate Bill 945, known as the Holding Foreign Companies Accountable Act, was promoted by its co-sponsor, Republican Senator John Kennedy of Louisiana, as a bill that would “kick deceitful Chinese companies off U.S. exchanges.” As discussed below, in addition to the recent Senate bill, efforts by regulators and market authorities with respect to rights to inspect and supervise auditors of foreign companies with securities listed on U.S. exchanges, are continuing.
Continue Reading Senate Acts to Enforce Audit Oversight on Foreign (Especially Chinese) Companies

In the latest securities suit related to the coronavirus outbreak, a plaintiff shareholder has filed a U.S. securities class action lawsuit against a Chinese real estate firm whose American Depositary Shares (ADSs) are listed on the NYSE, based on allegations that the company’s January 2020 IPO offering documents failed to disclose the impact of the outbreak on the company’s residential real estate operations in China. This latest filing is the first coronavirus-related securities lawsuit in the U.S. against a non-U.S. company. A copy of the plaintiff’s April 24, 2020 complaint can be found here.
Continue Reading U.S.-Listed Chinese Real Estate Firm Hit with Coronavirus-Related Securities Suit

For some time now, some observers had been predicting that we would be seeing a bunch of data breach-related securities class action lawsuits, but the predicted wave never seemed to materialize. However, with a recent uptick in these kinds of cases, that could be changing. On October 8, 2018, in the latest of these kinds of lawsuits to be filed, a plaintiff shareholder filed a securities class action lawsuit against China-based Huazhu Group. As discussed below, there are a number of interesting features of this latest data breach-related securities suit.
Continue Reading Chinese Hotel Company Hit With Data Breach-Related Securities Suit

It is axiomatic in the current global economy that every business needs to have a China strategy. Most business enterprises are drawn to the world’s most populous country and second-largest economy. But while China represents an attractive business marketplace, it can also in many respects be a perilous place to try to do business, particularly from a regulatory and compliance standpoint. While most businesses may recognize these challenges, many may struggle to try and address the concerns. A new book entitled “Governance, Risk and Compliance Management in China” (here), which I review below, may provide substantial help to companies trying to address compliance concerns arising from doing business in China. Of particular interest to this blog’s readers, the book includes an interesting chapter on D&O insurance issues in China.  
Continue Reading Book Review: Governance and Risk Management in China

As I noted in a post last week discussing the derivative lawsuit and settlement involving 21st Century Fox, allegations of failure to prevent alleged misconduct within company operations or at company facilities can translate into potential liability exposure for the company and its senior management. Another example of this phenomenon has emerged. In the weeks just after RYB Education completed its late September 2017 IPO, news reports began circulating of alleged child abuse at company preschool education facilities in China. Now a shareholder has filed a securities class action lawsuit in the U.S. against the company and certain of its executives. As discussed below, this new lawsuit represents the latest example of several different securities class action lawsuit filing trends.
Continue Reading Chinese Preschools’ Child Abuse Reports Lead to U.S. Securities Suit Against Recent IPO Company