Alibaba is reportedly paying US$250 million to settle a lawsuit for “material misrepresentations and omissions” in registration statement during its initial public offering (IPO) in 2014.
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According to a Reuters article, the lawsuit came about as the Chinese e-commerce giant failed to disclose a regulatory warning that Chinese officials had given the company. The class action lawsuit was brought to Alibaba by shareholders and investors who had purchased shares from Alibaba.
The shareholders claimed that during the initial registration, Alibaba failed to disclose that multiple Chinese regulators had informed the company that there were numerous and persistent illegal practices on Alibaba’s e-commerce platforms. It further added that Alibaba “had ignored, participated in, and covered up” these issues for a long time. The statement added that counterfeiting and other illicit activities were risks that could adversely impact Alibaba’s business.
In the court documents seen by Marketing, Alibaba has denied all allegations and are said to enter the settlement in a bid to eliminate the “burden and expense” of further litigation.
This comes not long after LinkedIn named Alibaba as the top company to work for in China. According to LinkedIn’s list, the study only includes companies with more than 500 employees, and companies that have seen staff numbers show positive growth or remained flat in the past 12 months. Globally, Alibaba has been emerging as a top player in the eCommerce scene. It made headlines in November last year for garnering US$30.8 billion of gross merchandise volume (GMV) on Singles’ Day, marking a 27% increase compared to 2017 and 230 countries.
Meanwhile, Alibaba’s co-founder Jack Ma has also now relinquished his active roles in five subsidiaries. Over the span of a decade, Ma has retired thrice with the first time being in 2006, according to several media reports.
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However, the subsequent financial crisis and Taobao being embroiled in a counterfeit goods scandal resulted in him resuming his duties at Alibaba. Marketing has reached out to Alibaba for additional information.
(Source: Marketing Interactive)