IN RE: ALIBABA GROUP HOLDING LTD. SECURITIES LITIGATION, 1:20-cv-09568

Background

This securities class action (Class Period: July 9–Dec 23, 2020) names Alibaba, CEO Daniel Zhang, CFO Maggie Wu, and Jack Ma, alleging violations of Section 10(b)/Rule 10b-5 and Section 20(a).
Plaintiffs allege two core misrepresentation theories: (1) Ant-related disclosures (Ant IPO/regulatory risk) and (2) omissions/misstatements about Alibaba's continued merchant exclusivity practices despite a July 2020 pledge to SAMR.
Ant Group IPO was suspended in early November 2020 after regulatory meetings; Alibaba ADSs dropped on Nov. 3 and Nov. 10, 2020; SAMR announced an antitrust investigation into Alibaba on Dec. 23, 2020 (ADS fell ~13%); SAMR later fined Alibaba ~$2.8B and found exclusivity practices in place since 2015.
Plaintiffs concede they did not buy Ant securities; they purchased Alibaba ADSs on the NYSE and allege Alibaba/individuals concealed regulatory risk and continued exclusivity, inflating ADS prices.
Plaintiffs allege Ma retained control influence (board, Partnership, equity stake) and that entities he controlled sold ADSs in late Sept./Oct. 2020; plaintiffs assert insider trading and control-based liability.
Court disposition: Ant-related claims dismissed for lack of standing; all claims against Ma dismissed (no personal jurisdiction re §10(b)/20(a) and insider-trading/other claims dismissed); Exclusivity-related claims against Alibaba, Wu, and Zhang survive (including Item 303 and §20(a) control-person claims as to Wu and Zhang).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to challenge Ant-related disclosures	Ant and Alibaba are closely related; Alibaba's ADS holders can challenge Ant disclosures because Alibaba's value tied to Ant	Purchaser-seller rule requires plaintiffs bought/sold the securities about which the misstatements were made; plaintiffs did not buy Ant	Dismissed for lack of standing (plaintiffs did not purchase Ant securities)
Personal jurisdiction over Jack Ma for §10(b)/§20(a) claims	Ma controlled Alibaba and directed the fraud; entities he controls traded ADSs in the U.S.; his conduct foreseeably affected U.S. investors	Ma lacked sufficient U.S. contacts, did not participate in preparing U.S. filings, and alleged misconduct was directed at Chinese regulators	Dismissed for lack of personal jurisdiction (insufficient minimum contacts; effects test not satisfied)
Insider trading by Ma (Rule 10b-5 / Rule 10b5-1)	Entities controlled by Ma sold $10M ADS while he possessed material nonpublic info about Alibaba	Sales were pursuant to a Rule 10b5-1 plan/regular dispositions and plaintiffs fail to plead Ma actually possessed material nonpublic information	Dismissed for failure to plausibly allege Ma knowingly traded on material nonpublic information
Exclusivity-practices securities fraud (misstatements/omissions), Item 303, and §20(a) control-person claims against Alibaba, Wu, Zhang	Alibaba mischaracterized exclusivity as "prior" and narrowly deployed; attributed growth to value proposition while concealing exclusivity; misstated belief in legality; omitted material risk — Wu/Zhang had access to contrary internal info; SAMR investigation disclosures support loss causation; Item 303 disclosure failure; Wu and Zhang liable as control persons	Defendants disclosed SAMR scrutiny and risk; exclusivity was public/known; November regulatory actions were intervening events; opinion statements inactionable absent proof defendants lacked belief	Exclusivity-related claims survive: court finds plaintiffs plausibly alleged materially misleading omissions ("prior"/growth/belief/risk), scienter re: Wu and Zhang (recklessness/conscious misbehavior), loss causation for Dec. 23, 2020 announcement; Item 303 and §20(a) claims survive as to Wu and Zhang

Key Cases Cited

Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723 (establishes purchaser-seller standing rule for §10(b) claims)
Menora Mivtachim Ins. Ltd. v. Frutarom Indus. Ltd., 54 F.4th 82 (2d Cir.) (standing requires purchase/sale of securities about which misstatements were made)
International Shoe Co. v. Washington, 326 U.S. 310 (minimum contacts test for personal jurisdiction)
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (purposeful availment and foreseeability in jurisdiction analysis)
Calder v. Jones, 465 U.S. 783 (effects test for jurisdiction; requires conduct expressly aimed at forum)
Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (scienter inference standard under PSLRA)
Omnicare, Inc. v. Laborers Dist. Council Const. Indus. Pension Fund, 575 U.S. 175 (when opinion statements can be actionable for omissions and basis-of-opinion theory)
Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard — plausibility rule)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading standard — factual plausibility required)
Basic Inc. v. Levinson, 485 U.S. 224 (materiality: "total mix" of information)
O'Hagan, 521 U.S. 642 (classical theory of insider trading)
Stratte‑McClure v. Morgan Stanley, 776 F.3d 94 (2d Cir.) (duty to disclose where a company addresses topics and omits material facts)