While Alibaba maintains that it did not engage in any wrongdoing, the company opted for the settlement to avoid the expenses and disruptions associated with prolonged legal proceedings.
The proposed settlement has been submitted to federal court in Manhattan and awaits the approval of U.S. District Judge George Daniels. The lawsuit, initiated in 2020, contended that Alibaba misrepresented its compliance with anti-monopoly and unfair competition regulations by mandating that merchants select only one distribution platform.
This settlement pertains to investors holding Alibaba's American depositary shares from November 13, 2019, to December 23, 2020, and addresses claims that they incurred losses when the market became aware of Alibaba's misleading statements, leading to a decline in stock price.
Plaintiffs' attorneys described the proposed settlement in court documents as "an exceptional result," noting that it significantly surpasses the median recovery in securities class actions involving investor losses exceeding $10 billion.
The potential maximum damages that Alibaba investors could have pursued had they continued with the litigation were estimated at $11.63 billion, according to the lawyers. The case is recorded as in re Alibaba Group Holding Ltd Securities Litigation, U.S. District Court, Southern District of New York, No. 20-09568.