Seven US law firms have filed a class action lawsuit against Chinese e-commerce giant Alibaba, alleging that the company concealed its investigation by the authorities. The investigation would drive down the market value of the company by over US$30 billion over four trading sessions ending on Feb. 2, reports the Chinese-language National Business Daily.
The seven law firms are notorious raiders on China concept stocks on the US stock market. Between 2010-12, they attacked 30 stocks, forcing the companies to delist their shares or file for bankruptcy as a result. Some chose to reach settlement, enabling the law firms to collect 30% of the compensation as fees.
At issue is the findings of a survey by the State Administration for Industry and Commerce (SAIC) showing the high percentage of knockoff products sold on Taobao, China’s largest e-commerce website and under the auspices of Alibaba Group. The authorities deliberately withheld the findings of the survey until completion of Alibaba’s US IPO, according to the Associated Press.