(Yicai Global) Dec. 6 -- Alibaba Group Holding Ltd. [NYSE:BABA] will face a renewed lawsuit in the US accusing the internet giant of defrauding investors after a successful appeal overturned a lower court ruling yesterday.
Investors accused Alibaba early last year of failing to disclose full information on regulatory risks related to counterfeit products prior to its initial public offering (IPO) in the US, resulting in significant losses.
The 2nd US Circuit Court of Appeals in Manhattan yesterday found errors in a decision from June last year stating that Alibaba's listing materials did contain extensive disclosures. Last year's ruling stated that plaintiffs did not present evidence that Alibaba tried to conceal a meeting with Chinese regulator, the State Administration of Industry and Commerce (SAIC), in order to make sure the IPO went ahead.
The SAIC's online market unit met with Alibaba in July 2014 and published a follow-up white paper in January 2015 outlining key issues facing them firm such as counterfeit products and trademark infringements.
Shares in Alibaba fell 12.8 percent on Jan. 28 and 29, 2015 after the whitepaper's release, with some reports in western media alleging that Alibaba failed to disclose such risks ahead of its September 2014 IPO
Chinese regulators later withdrew the white paper, stating that the document constituted meeting minutes and was not legally binding. Complainants have filed several class action lawsuits against Alibaba since.