Case Spotlight: Alibaba American Depositary Shares Settlement
The United States District Court for the Southern District of New York preliminarily approved a settlement involving Alibaba Group, which will pay $433.5 million to resolve shareholder claims of securities law violations.
In re: Alibaba Group Ltd. Securities Litigation is notable both because of its size – representing the third-largest U.S. securities settlement FRT tracked in 2024 – and the defendant’s status as a major, multinational technology corporation. Below is a brief analysis of the case and key filing considerations for affected investors.
Background
- Claim deadline: March 26, 2025
- Class period: 13, 2019 through Dec. 23, 2020
- Settlement fund: $433.5 million
Alibaba Group, one of the world’s largest retailers and e-commerce companies, is listed both on the Hong Kong Stock Exchange and the New York Stock Exchange via American Depositary Shares (ADS).
Investors allege that defendants Alibaba Group and four named officers violated federal securities laws by making material misstatements about Alibaba’s alleged “exclusivity practices,” as well as the planned IPO of Ant Group – a company in which Alibaba owned a large stake. Plaintiffs further claim that the prices of Alibaba’s NYSE-traded ADS were artificially inflated by these misstatements over a period of several months.
The large ensuing settlement continues a recent pattern of high-profile securities settlements involving Big Tech companies.
Filing Considerations for Eligible Investors
The substantial settlement pool and high volume of expected claims filed suggest that the case will feature a lengthy administration process with thorough auditing. With the claim deadline set for March 26, our team recommends that impacted investors begin gathering the required documents now in anticipation of these challenges.
More generally, FRT’s internal tracking of documentation audits highlight growing scrutiny of claims filed in U.S. securities class actions, with our data showing a 150% year-over-year increase in such audits during 2024.
With a class period dating back to 2019, investors may also face hurdles in obtaining the necessary records, particularly if they’ve changed custodians or investment managers.
International Implications
The settlement continues a significant trend for non-U.S. investors. In recent years, roughly 20% of defendants in new U.S. securities class actions are headquartered elsewhere. Chinese businesses make up a large portion of these cases.
Although Alibaba is a Chinese conglomerate, its NYSE-listed ADS gives global shareholders a more straightforward path to securing compensation than those investing on the Hong Kong exchange. The reasons for this include:
- Stronger legal protections. U.S. laws are more favorable to investors than those in other jurisdictions. To date, China has only had one significant class action recovery.
- Passive participation. U.S. class actions do not require claimants to join litigation, eliminating many of the risks and burdens global investors typically face.
- Efficiency. U.S. class actions can offer a much shorter time to resolution compared to other legal systems.
Looking Ahead
The size and potential complexity of the upcoming Alibaba settlement underscore the importance of proper claim preparation and understanding how to best work with administrators to resolve deficiency challenges. As we have seen with similar high-profile settlements, seemingly small oversights can prevent eligible investors from receiving their just compensation.
If you would like to learn more about this settlement or discuss your filing options, use the form below to get in touch.