(Yicai Global) Aug. 20 -- Rosen Law Firm, a US global investor rights law firm, has filed a class action lawsuit against Baidu on behalf of investors in the Chinese internet behemoth for making false or misleading statements during the Nasdaq listing of its video streaming unit iQiyi.

This is the latest escalation in a series of setbacks for iQiyi since the Beijing-based firm was accused of fraud in April by due diligence firm Wolfpack Research.

“(1) Baidu misrepresented the financial and business condition of iQiyi; (2) iQiyi had inadequate controls; and (3) as a result, defendants’ public statements were materially false and/or misleading at all relevant times,” the New York-based law firm said in a statement on its website yesterday.

The lawsuit seeks to recover damages for investors who bought securities in Baidu between April 8, 2016 and August 13, 2020, Rosen Law said. It did not provide any further details. Baidu and iQiyi have yet to comment.

“Our research shows us that iQiyi was committing fraud well before its initial public offering in 2018 and has continued to do so ever since,” the New York-based short seller said on April 6. It accused iQiyi of inflating its 2019 revenue by about CNY8 billion (USD1.1 billion) to CNY13 billion and the number of users by between 42 percent and 60 percent.

On Aug. 14, iQiyi, in which Baidu holds a 56 percent stake, revealed that it is under investigation by the US Securities and Exchange Commission. The firm has been asked to provide financial records since January 2018 and the financial content referred to in the WolfPack report, it added.

iQiyi has hired consultants to defend it against WolfPack’s allegations, but it cannot predict the duration and outcome of the SEC investigation, it said. The company's internal review is also still in progress, it added.

Editor: Kim Taylor