Alibaba to settle lawsuit over counterfeit cover-up for US$250 million
Chinese e-commerce giant Alibaba has said it will pay US$250 million to settle a class action lawsuit over claims that it concealed a regulatory warning about its ability to keep counterfeit products off its websites before going public in 2014.
According to Reuters, the lawsuit accused Alibaba of failing to disclose a meeting with China’s State Administration for Industry and Commerce in July 2014, two months before it listed on the New York Stock Exchange in a US$25 billion IPO.
The SAIC later published a white paper in January 2015, referring to concerns raised at the meeting that many products on Alibaba’s websites were fake or infringed trademarks. The white paper also said SAIC delayed releasing its findings so the IPO would not be affected, Reuters reported.
Alibaba’s share price fell 12.8 per cent following the white paper’s release.
Alibaba has denied any wrongdoing, and says the settlement ends all pending securities litigation against the company, its executive officers and directors.
The accord requires court approval.