Simpson Thacher Wins Dismissal with Prejudice in Alibaba Securities Class Action
06.23.16
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Simpson Thacher won a resounding victory in a securities fraud case on behalf of client Alibaba Group Holding Limited on June 21, 2016.
In September 2014, Alibaba raised $25 billion in its initial public offering — the largest in history. Three months later, China’s State Administration for Industry and Commerce, one of the Alibaba’s primary Chinese regulators, issued a so-called “white paper” criticizing Alibaba’s oversight of third-party merchants, the sale of allegedly counterfeit goods on its online marketplaces, and certain other allegedly inappropriate business practices. Alibaba’s stock price dropped and lawsuits were filed. Seven securities class actions filed in three jurisdictions were consolidated in the United States District Court for the Southern District of New York. Plaintiffs alleged that Alibaba’s IPO disclosures were deficient for failure to disclose increased regulatory scrutiny in China in advance of its IPO.
In a 40-page opinion, Chief Judge Colleen McMahon dismissed the consolidated complaint for securities fraud against Alibaba and several of its officers. In granting the motion to dismiss in full the Court found that Alibaba’s IPO disclosures were “unusually comprehensive” and “fully disclose[d] all substantive investment risks.” Chief Judge McMahon also denied Plaintiffs leave to amend the complaint, finding that the pleading deficiencies were “substantive” and that leave to replead would therefore be “futile.”
The Simpson Thacher team on this case is James Kreissman, Jonathan Youngwood, Simona Strauss, Stephen Blake, Bryan Jin, Elizabeth White, and Randy Moonan.