Ant Group

The regulatory move to suspend Ant Group's IPO is well accepted among international investors, Fang Xinghai, vice chairman of the China Securities Regulatory Commission said on Tuesday, putting the markets on notice about greater regulatory attention to the technology stocks.

Speaking at the third annual Bloomberg New Economy Forum via live-streaming, Fang said that overseas capital continued to flow into China's capital market last week and US-listed Chinese stocks posted stellar performances.

Regulators will pay more attention to the technology stocks, in particular those companies' response to the regulatory environment, he said, adding that Ant's IPO date is contingent upon how the Chinese government reorganizes the regulatory framework.

The plug was pulled on Ant's dual listing in Shanghai and Hong Kong on November 3 amid regulatory tightening moves, surprising market participants who had anticipated a record-smashing IPO by the Chinese fintech giant, a pivotal part of the Alibaba ecosystem.

Ant declined to comment on the progress of the suspended IPO when reached by the Global Times on Tuesday.

Even if the Alipay operator eventually regains regulatory nod for its IPO, its market valuation will likely take a battering as its business model is being put under stricter regulatory scrutiny, experts from both the fintech sector and traditional financial arena told the Global Times.    

The abrupt reversal on the IPO was considered to be just the beginning of the troubles surrounding Jack Ma Yun's e-commerce behemoth, which has been embroiled in class action lawsuits over a fall in its US-listed shares resulting from its alleged failure to disclose information concerning Ant's IPO.

The HAO Law Firm in Beijing has filed a class action suit representing investors who purchased or otherwise acquired shares or options of Alibaba's US listing between October 21 and November 3.

When asked about concerns over whether Alibaba would have known of the regulatory changes and the resultant listing suspension, Hao Junbo, chief lawyer at the firm who's well-versed in securities litigation, told the Global Times on Tuesday that "the lawsuit is still in its infancy and as the facts become clearer, [we can] submit evidence."

Hao said that he was told by some media that relevant industry insiders should have known of the regulatory changes ahead of time, as they would have been asked for input on any proposed new rules. "We're looking into this."

Glancy Prongay & Murray LLP, a Los Angeles-based investor rights law firm, announced on Friday that it has filed a securities fraud class action lawsuit in a New York district court against Alibaba on behalf of investors that purchased the firm's US shares from October 21 to November 3. 

While multiple class action suits may be filed for the same reason, they will eventually be merged into one suit, with the most adequate plaintiff chosen to lead the litigation among a group of plaintiffs and the lead plaintiff's lawyer assuming the role of lead counsel, according to Hao.

Alibaba didn't respond to a request for comment as of press time.

It's not the first time that the e-commerce giant has been confronted with securities fraud litigation. 

Alibaba announced in April 2019 plans to pay $250 million to settle a class action lawsuit faulting its failure to disclose a meeting with then State Administration for Industry and Commerce in mid-July 2014, two months prior to its $25 billion IPO on the New York Stock Exchange.