JD.com faces US class action lawsuits as CEO Richard Liu's arrest over rape claim sparks share price slide

Celia Chen
1 / 2

JD.com faces US class action lawsuits as CEO Richard Liu's arrest over rape claim sparks share price slide

JD.com faces US class action lawsuits as CEO Richard Liu's arrest over rape claim sparks share price slide

JD.com, China’s second largest e-commerce player, is facing class action lawsuits from several US law firms which allege the company may have failed to disclose information pertinent to its chief executive officer Richard Liu Qiangdong, who was arrested in the US last Friday for alleged sexual misconduct.

The Schall Law Firm, Pomerantz LLP and Rosen Law Firm all said separately on Tuesday they are investigating potential securities claims on behalf of shareholders of JD.com. Shares of the Nasdaq-listed company fell US$1.87 or 5.97 per cent to close at US$29.43 on September 4, the first trading day following Liu’s arrest in Minnesota on August 31 for alleged sexual assault.

JD.com is the worst-performing stock on the Nasdaq 100 index, declining 33 per cent in the past six months.

Rosen alleges that JD.com may have issued materially misleading business information to the investing public, while Schall said its investigation focuses on whether the Chinese company issued false and/or misleading statements and/or failed to disclose information pertinent to investors, according to announcements on their respective websites.

Pomerantz, which had not posted details of its class action lawsuit against JD.com on its website as of the time of writing, said in a press release through PRNewswire.com dated September 4 that it is investigating claims on behalf of investors as to whether JD.com and some of its officers and/or directors engaged in securities fraud or other unlawful business practices, which it did not specify.

JD.com shares plunge after Richard Liu’s US arrest on sexual misconduct claim

Class action lawsuits against listed companies are common in the US. Last month, Nasdaq-listed Pinduoduo, whose shares slumped on media reports that criticised the Chinese e-commerce platform for selling counterfeit products, also faced class action lawsuits from at least six legal firms, including the three that are considering action against JD.com.

While Liu has dropped out of the top 10 popular search terms on Weibo – where news of his arrest in the US was a hot topic on social media in China earlier this week – his profile has become one of the most viewed on the Bloomberg terminal, a news-and-data tool used primarily by traders and investors, attracting 250 “hits” or views on Wednesday. That made him the 11th-most viewed profile on the terminal.

JD.com did not immediately respond to a request for comment on the US class action lawsuits.

In its latest annual report, the company said that as of February 28 this year Liu beneficially owned 79.5 per cent of the aggregate voting power of our company, giving him “considerable influence over important corporate matters”.

Liu, also founder of JD.com, was arrested on a rape accusation, a first-degree felony if he is charged with the crime, according to police records. No charge has been filed against Liu as the matter is still under investigation by the sex crimes division of the Minneapolis Police Department.

“We are putting resources to the investigation and our concern is to provide services to the complainant and to ensure that we’re protecting the rights of Mr Liu,” John Elder, a police department spokesman, told the South China Morning Post.

Facebook and Cambridge Analytica face class action for ‘misusing data’

Liu was in Minneapolis to take classes at the University of Minnesota, where he was enrolled at the school’s Carlson School of Management to complete the American residency of a US-China business administration doctorate programme.

JD.com said in a statement on Monday: “We were informed that our CEO Richard Qiangdong Liu was taken into custody by Minneapolis police on August 31, 2018. He has been released without any charges, and without requirement for bail. Mr Liu has returned to work in China.”

JD.com’s billionaire founder Richard Liu back in China after US arrest

Meanwhile, the identity of the alleged accuser remains unknown. A woman referred to as the victim in multiple online posts has put out a statement denying she has ever met Liu.

The 45-year-old billionaire returned to China on Monday after he was released without any charges. He showed up at JD.com’s Beijing headquarters on Tuesday morning to sign a strategic partnership with Chinese textile manufacturer Ruyi Group. JD.com released a group photograph showing a smiling Liu flanked by Qiu Yafu, chairman of Ruyi, and executives from both companies.

This article JD.com faces US class action lawsuits as CEO Richard Liu's arrest over rape claim sparks share price slide first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2018.

More from South China Morning Post: