Bottini & Bottini is a member of Plaintiffs' Executive Committee in this securities class action on behalf of all persons who purchased or otherwise acquired Alibaba American Depository Shares (“ADS”) pursuant or traceable to the registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with Alibaba’s September 2014 initial public stock offering (the “IPO” or “Offering”).
The action asserts strict liability claims under §§ 11, 12 and 15 of the Securities Act of 1933 (“1933 Act” or “Securities Act”) against Alibaba, certain Alibaba officers and directors, and the underwriters of the IPO.
Alibaba is a Chinese e-commerce company that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals. The Company also provides electronic payment services, a shopping search engine and data-centric cloud computing services. The group began in 1999 when Jack Ma founded the website, a business-to-business portal to connect Chinese manufacturers with overseas buyers. In 2012, two of Alibaba’s portals handled 1.1 trillion yuan ($170 billion) in sales. The company primarily operates in the People’s Republic of China (PRC), and on the date of its IPO, Alibaba's market value was $231 billion. However, the market cap was $145 billion at the end of September 2015. In September 2014, Alibaba launched its IPO and issued approximately 368 million ADS at a price of $68 per share, all pursuant to the Registration Statement.
The Registration Statement contained material omissions as well as untrue statements of material fact. The Registration Statement failed to disclose that Alibaba executives had met with China’s State Administration of Industry and Commerce (“SAIC”) in July 2014, just two months before the IPO in the United States, and that regulators had then notified Alibaba of a variety of illegal business practices that threatened the core of Alibaba’s business, including:
• the payment of bribes to Alibaba workers by merchants and others seeking help to further their sales, Internet search rankings, and procurement of prime advertising space on Alibaba’s website and portal;
• a highly material amount of sales of counterfeit goods, including fake cigarettes, alcohol and branded handbags, by vendors on Alibaba’s third-party marketplace platform;
• the fact that regulators had accused Alibaba of alleged anticompetitive behavior such as forbidding merchants to participate in rival sites’ promotions;
• the sale of restricted weapons and other prohibited items on Alibaba’s third party marketplace platform; and
• that Alibaba ignored the practice by some vendors of faking transactions to make their sales volumes appear higher.