Alibaba to Pay $433.5 Million in One of Largest Securities Class Action Settlements

Alibaba Group Holding Ltd. has agreed to pay $433.5 million to settle a securities fraud class action lawsuit in Manhattan federal court. This settlement, once approved by the court, will rank among the 50 largest securities class action settlements in U.S. history since the Private Securities Litigation Reform Act of 1995.

The consolidated case was brought by Alibaba shareholders who alleged the Chinese e-commerce giant misled investors about its monopolistic business practices as well as the failed $34.5 billion IPO of Ant Group, a fintech company in which Alibaba holds a substantial equity stake.

Specifically, the shareholders claimed Alibaba made "materially misleading statements" about the success and prospects of the highly anticipated Ant Group IPO, which was abruptly halted by Chinese regulators in 2020. The investors also accused Alibaba of falsely claiming its merchants were not exclusively bound to its platform, when in fact the company engaged in anti-competitive behavior.

Last year, the presiding judge dismissed the shareholders' claims related to the Ant Group IPO debacle, but allowed the antitrust-related allegations to move forward. Alibaba has now opted to settle the remaining claims with the $433.5 million all-cash payment.

In a regulatory filing, Alibaba stated that it is entering into the settlement "to avoid the cost and disruption of further litigation," though the company continues to deny any fault or liability.

Glancy Prongay & Murray LLP is serving as lead counsel for the shareholder class, while Simpson Thacher & Bartlett LLP is representing Alibaba. The settlement still requires approval from the U.S. District Court for the Southern District of New York.

This substantial payout underscores the significant legal and financial risks companies face when they are accused of securities fraud and anti-competitive practices. For Alibaba, the settlement represents one of the largest such payouts in U.S. history, highlighting the steep price it is willing to pay to put this protracted legal battle behind it.

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