Alibaba Settles Investor Suit for $4.3B Amid Antitrust Allegations and IPO Misstatements

Alibaba Group has agreed to pay $4.335 billion to settle a class-action lawsuit filed by U.S. investors, without admitting any wrongdoing. The decision aims to avoid further litigation costs and disruptions. The settlement, pending court approval, represents one of the largest under the Private Securities Litigation Reform Act, addressing allegations related to antitrust issues and misstatements concerning Ant Group's IPO.

Lawyers indicate Chinese investors might also benefit, provided they held Alibaba's U.S. depository shares between November 13, 2019, and December 23, 2020. The lawsuit accused Alibaba of antitrust practices linked to the "exclusive dealing" policy and misleading statements that allegedly inflated stock prices. Claims involved complex e-commerce and antitrust regulatory issues.

The settlement accounts for a fraction of the potential $11.229 billion damages but exceeds average securities settlement recovery rates. This reflects a strategic decision by Alibaba to mitigate litigation risks. Although the company denies any unlawful conduct, the settlement helps to eliminate ongoing legal uncertainties.

Eligible investors can participate in the claims process through designated legal channels, expecting Settlement Fund distribution upon court approval. Despite challenges in obtaining compensation, this resolution marks a pivotal moment in addressing investor grievances and Alibaba’s ongoing legal strategy.

In related developments, Alibaba has fulfilled a three-year rectification mandate from Chinese regulatory authorities, which had penalized the company for "exclusive dealing" practices, enhancing compliance measures and business conduct standards significantly.