Pomerantz Secures Preliminary Approval for $433.5 Million Settlement in Alibaba Class Action

Pomerantz, representing class plaintiffs in securities litigation against Alibaba Group, achieved preliminary approval of a $433.5 million settlement for investors on October 28, 2024. This is the 21st-largest securities class action settlement in the Southern District of New York and ranks among the top 50 largest in the U.S. since the Private Securities Litigation Reform Act was enacted in 1995.

Alibaba, founded by Jack Ma in 1999, initially served as a bridge between Chinese manufacturers and global buyers. It has grown into a tech conglomerate that spans sectors from e-commerce and finance to cloud computing and logistics. One of Alibaba’s affiliates, Ant Group, is a major player in the fintech sector, known for operating Alipay, one of the world’s largest mobile payment platforms, along with services such as digital wallets, credit scoring, insurance, and investment products. While Ant Group promotes financial inclusion through accessible, innovative financial solutions, it has faced increasing scrutiny regarding its financial transparency.

On July 20, 2020, Alibaba announced that Ant Group aimed to raise $34 billion through an initial public offering (IPO) on the Hong Kong Stock Exchange and the Shanghai STAR Market. However, this announcement was overshadowed by legal issues, with allegations that Alibaba misled investors regarding its business practices and risks surrounding the IPO. Leading up to the offering, Alibaba allegedly engaged in deceptive practices by withholding crucial information about illegal activities and risks, including undisclosed directives from the Chinese government’s State Administration for Market Regulation (SAMR) to end anti-competitive practices like forcing merchants into exclusive selling agreements. Rather than comply, Alibaba allegedly continued its unlawful practices, jeopardizing its revenue. The company also allegedly misrepresented its revenue sources by failing to disclose that part of its income came from these illegal practices and by concealing regulatory risks tied to Ant Group’s IPO, including issues with ownership structure and new lending regulations that threatened the IPO’s success.

Pomerantz’s Managing Partner Jeremy A. Lieberman and Of Counsel Jonathan D. Park represented class plaintiffs.

After four years of hard-fought litigation, U.S. District Judge George B. Daniels approved the $433.5 million settlement as “fair, reasonable, and adequate.” A final settlement hearing is scheduled for March 27, 2025.