Alibaba Settles Antitrust Investor Suit for $433.5 Million

Alibaba Group Holding Ltd. has agreed to pay $433.5 million to settle a long-running securities fraud lawsuit in a Manhattan federal court, according to Bloomberg. The lawsuit, a class action brought by shareholders, accused the Chinese e-commerce giant of misleading investors regarding its competitive practices and the failed initial public offering of Ant Group Co., Alibaba’s financial affiliate.

The accord, which must still receive final approval from the U.S. District Court for the Southern District of New York, is a significant conclusion to a case that has spanned nearly four years. If approved, the settlement would rank among the 50 largest securities fraud settlements in the United States since the enactment of the Private Securities Litigation Reform Act in 1995, per Bloomberg. The settlement consists of an all-cash payment aimed at compensating shareholders who argued that Alibaba’s actions had led to substantial financial losses.

The lawsuit originated in 2020, shortly after Ant Group’s planned $34.5 billion IPO was abruptly halted by Chinese regulators. Shareholders alleged that Alibaba and two of its executives made materially misleading statements about the IPO’s likelihood of success and Ant Group’s growth potential. Additionally, the investors claimed that Alibaba concealed information about its monopolistic practices, including claims that it limited merchants to selling only on its platform—a practice that later led to a $2.8 billion fine from Chinese regulators.

Read more: Alibaba Completes Antitrust Overhaul, Marking End of Regulatory Scrutiny

Judge George B. Daniels, who presides over the case, narrowed the shareholders’ claims last year, dismissing allegations concerning the Ant Group IPO but allowing antitrust claims related to Alibaba’s alleged monopolistic practices to proceed. According to court filings, Alibaba maintained that it did not admit fault or liability in the case, stating in a regulatory filing that the settlement was intended to avoid the costs and complications associated with further litigation.

The case, formally cited as In re Alibaba Grp. Holding Ltd. Sec. Litig., is being handled by law firms Glancy Prongay & Murray LLP, representing the shareholders, and Simpson Thacher & Bartlett LLP, representing Alibaba. The settlement, if granted court approval, marks a substantial resolution in what has become a high-profile case examining corporate governance and regulatory pressures in China’s tech sector.

Source: Bloomberg