US judge narrows shareholder lawsuit against Alibaba
FILE PHOTO: The logo of Alibaba Group is lit up at its office building in Beijing, China August 9, 2021. REUTERS/Tingshu Wang
NEW YORK: A US judge said Alibaba Group Holding Ltd, the Chinese e-commerce giant founded by Jack Ma, must face claims it defrauded shareholders about its alleged monopolistic practices, but dismissed claims over a shelved initial public offering for its Ant Group affiliate.
In a 31-page decision on Wednesday, US District Judge George Daniels in Manhattan also dismissed all claims against the billionaire Ma, including for insider trading.
Shareholders accused Alibaba of concealing regulatory concerns about an IPO for Ant, which operated the Alipay mobile payment platform and in which Alibaba had a 33 per cent stake, before China blocked the potential $37 billion offering in 2020.
They also faulted Alibaba for maintaining it did not violate anti-monopoly or unfair competition laws, despite its practice of requiring merchants to choose only one distribution platform.
Beijing announced an antitrust probe in Dec 2020, and fined Alibaba US$2.75 billion four months later for requiring "merchant exclusivity" to do business.
Daniels said Alibaba shareholders lacked standing to sue over Ant, because the IPO did not happen and thus they never bought or sold Ant shares.
He said they could sue Alibaba, Chief Executive Daniel Zhang and former Chief Financial Officer Maggie Wu over the antitrust compliance statements.
"Alibaba's continued use of exclusivity practices, contrary to its public representations and commitments, indicates that defendants may not have had a reasonable basis upon which to assert that their conduct was legal," he wrote.
Lawyers for the shareholders did not immediately respond to requests for comment. Alibaba and the defendants' lawyers did not immediately respond to similar requests.
The lawsuit was brought by investors in Alibaba's American depositary shares from Jul 9 to Dec 23, 2020, who claimed they suffered losses when the market recognized Alibaba's misleading statements and the stock price fell.
Ma agreed in January to give up control of Ant. Forbes magazine said on Wednesday he was worth US$23.7 billion.
