Alibaba Shareholder Class Action Lawsuit Reaches $433.5 Million Settlement

Alibaba Group has agreed to pay $433.5 million to resolve the shareholder class action lawsuit. Shareholders affected by Alibaba Group practices can learn about this settlement and further proceedings here. 

Alibaba Shareholder Class Action Lawsuit

On 25 October 2024, Alibaba Group agreed to settle a class action lawsuit in Manhattan federal court alleging that the company had violated federal securities law. The plaintiffs of this settlement are shareholders who filed the lawsuit against the Chinese e-commerce giant claiming the company has misled the investors about its monopolistic practices through misinformation. 

The lawsuit was filed against the e-commerce company in 2020 in the US District in the Southern District of New York. The misleading statement and violation of federal securities law caused financial loss to investors due to an artificial hike in stock price. According to the lawsuit, the company has misled the shareholders and investors about its monopolistic practices making them believe they have stopped such practices. 

The Chinese e-commerce giant has denied any wrongdoing and unlawful activities but decided to settle the case to avoid more litigation costs and save its name. The company has agreed to settle the lawsuit with a $433.5 million settlement fund, which now awaits federal court approval.  

Who will be the class members of Alibaba Shareholder Class Action Lawsuit?

According to the lawsuit, in 2020, two executives first filed a lawsuit against Alibaba for misleading statements about their practices and the success of Ant Group’s $34.5 billion IPO. The company has incurred a $2.8 billion antitrust penalty for its lie that merchants are not bound by the platform. The current lawsuit of $433.5 million is focussed on the following investors who will be claimants of the Alibaba Shareholder Class action settlement:

  • Entities or individuals who bought or acquired Alibaba’s American depositary shares during the class period,  09 July 2020 and 23 December 2020.

Exclusion:

  • The directors, officers, and other employees of the Alibaba group are excluded from the settlement.
  • The immediate family members of the Alibaba employees, officers, and directors are also excluded from the class action. 

Alibaba Shareholder Class Action Lawsuit

Alibaba Shareholder Class Action Settlement payout

The payout for the eligible investors is not set as the settlement is yet to get the final approval, but the investors should know the settlement will help them retain the losses they suffered when Alibaba’s monopolistic practices were disclosed in the market leading to a fall in stock price.

The plaintiff’s attorney and legal representatives have said the proposed settlement is the best deal for the claimants as it will help the investors recover their losses exceeding $10 billion. The settlement amount, which is 3.7% of the maximum estimated damage done is $11.2 billion to Alibaba’s violation of federal securities law and monopolistic practices. 

In the past three years, this is the highest average settlement rate in any securities law violation class action settlement, so the US claimants can expect higher payout or at least a high percentage of the losses that occurred due to the company’s unlawful practices. 

The Chinese investors have received compensation for the $2.8 billion penalty alleged upon the Alibaba company for their monopolistic practices, where they have intentionally gained market power through anticompetitive conduct. 

What’s next in Alibaba Shareholder Class Action Lawsuit?

The Alibaba group promised to cease the monopolistic practices in 2020 with the State Administration for Market Regulation but they still practice and violate the anti-monopoly laws. Now that the lawsuit has been filed, the settlement is proposed and the defendants have agreed to pay the settlement, the next step will be the court approval of the settlement in the US District Judge George Daniels. 

The approval hearing for the Alibaba Shareholder class action settlement is still not disclosed. The Alibaba Group Holding Ltd Securities litigation in the New York Southern District. Last year, Judge Geroge Daniels rolled out the antitrust claims and tossed out the shareholder’s claims on the IPO claims. 

The claiming process of the Alibaba Shareholder Class action settlement will be only known after the court’s approval as it will begin only after the court authorization. The eligible class members will receive the settlement notice after the approval with the dates, Alibaba class action settlement agreement, and claim process information. The settlement payout and other benefits will be known after the court’s approval or the number of claimants.  

The claimants or investors affected by Alibaba’s violating federal securities laws should keep an eye on the further proceedings and news channels to hear about the next step in the class action settlement. 

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