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Wei Lai's class action lawsuit in the United States: there is a false statement in the IPO. Zhang Yaqin is involved
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Recently, Weilai Automobile encountered a class action lawsuit initiated by Rosen Law Firm in the United States. The indictment stated that Weilai Automobile’s registration statement on September 11, 2018 and the prospectus on September 12, 2018 had a materially false or misleading statement, causing investors to lose money and demanding compensation.
In addition, earlier today, ChinaSoft International and AsiaInfo Technology, which are directors of Zhang Yaqin, issued a statement stating that such class actions are not uncommon in companies listed in the United States of America and that the lawsuit will not be a business of any member of the group. And/or the operation has any significant adverse effects. AsiaInfo also said in the announcement that the board of directors received a notice from Zhang Yaqin that the lawsuit was at an initial stage. Although the judgment was not known, the lawsuit was unfounded.
Since March this year, Weilai Automobile has been subjected to at least three class actions in the United States, alleged to have misrepresentation. Previously, in response to a lawsuit initiated by one of the law firms, Wei Lai responded to the media that the allegations were unfounded and would actively defend themselves.
Weilai Auto's latest financial report shows that in the whole year of 2018, Weilai's total annual revenue was 4.951 billion yuan ($720.1 million), and the annual operating loss was 9.595 billion yuan ($1,395.6 million), an increase of 93.7% compared with last year. . The annual net loss was 9.639 billion yuan ($1,401.9 million), an increase of 92.0% compared with last year.
The following are the main contents of the indictment:
defendant:Wei Lai, Li Bin, Xie Dongying, Qin Lihong, Padmasree Warrior, Tian Cheng, Xiang Li, Hai Wu, Zhang Yaqin, Xianping Zhong, Zhaohui Li, Denny Ting Bun Li, James Gordon Mitchell ), Morgan Stanley, Goldman Sachs Group (Asia), JP Morgan Chase Securities LLC, Merrill Lynch, Pierce, Fenner &;;;;;;; Smith Inc., Deutsche Bank Securities, Citigroup Global Financials, Switzerland Credit Securities (USA), UBS Securities LLC and WR SECURITIES.
1. This is a class action lawsuit filed on behalf of a group of individuals and entities other than the defendant and its affiliates. The group may, in accordance with and/or may be traced back to the initial public offering ("IPO") conducted by Weilai Automobile (hereinafter referred to as "Weilai") around September 12, 2018, to purchase or otherwise obtain the disclosure of Weilai. Trading securities. The group seeks compensation for the losses caused by the defendant's violation of Sections 11, 12 and 15 of the Securities Act of 1933 (the “Securities Act”).
2. The IPO is based on the listing application form for securities submitted in the F-1 form submitted to the US Securities and Exchange Commission for this IPO. The registration form for the application for securities is subsequently revised several times. The final revised version was submitted to Form F-1/A on September 11, 2018. The prospectus was submitted on September 12, 2018 (hereinafter collectively referred to as “Listing Registration” table"). On September 11, 2018, the Securities and Exchange Commission announced that the listing registration form became effective.
3. On August 28, 2018, Weilai submitted a F-6 form to the Securities and Exchange Commission to register its American Depositary Shares ("ADS"), which was subsequently revised and finally issued by Securities on September 11, 2018. The Trading Commission was declared effective.
4. There are the following major false or misleading statements in the listing form: (1) Weilai will not build its own production plant, but will continue to rely on a little-known Chinese state-owned car manufacturer –Jianghuai AutomobileGroup Co., Ltd., or "Jianghuai Automobile" - to manufacture its electric vehicles; (2) the government's reduction of subsidies for electric vehicles will seriously affect the sales volume of Weilai; and (3) therefore, the defendant's business for Weilai Statements of operations, operations, and prospects are false and misleading at all relevant times.
5. Weilai sold 160,000,000 ADSs at a price of US$6.26 per share and raised more than US$1 billion in the company's IPO. The underwriters' defendants received a total of more than $40 million in fees from Weilai's IPO. Since the IPO, and because the Weilai listing registration form did not disclose any material unfavorable facts, Weilai's share price has fallen by 3.67% or down $0.23 from its IPO pricing. At the close of trading on March 14, 2019, Weilai's share price About $6.03 per share, causing losses to plaintiffs and class members.
19. The defendant, Zhang Yaqin, was one of the directors of Wei Lai. He resigned immediately after the Securities and Exchange Commission announced the listing registration form and the resignation took effect immediately. The defendant Zhang Yaqin signed the listing registration form.
Major false and misleading statements
37. The listing form declares that Weilai is “developing our own manufacturing plant in Shanghai and is expected to be completed by the end of 2020”.
38. Wei Lai announced in the listing form that the company is starting to build its own manufacturing plant in Shanghai, which will allow Wei to “expand its production capacity for ET7 and future models” and “help the company obtain its own electric vehicle” Manufacturing license".
39. This information is important to investors because Wei Lai – although claiming to be an electric car company – did not actually produce the car itself. Instead, Weilai signed a contract with the lesser-known Chinese state-owned automaker Jianghuai Automobile to produce its own electric car.
40. In addition, since 2010, the Chinese government has subsidized consumers who purchase electric vehicles. However, the Chinese government has indicated that it will gradually reduce this subsidy from 2019.
41. The above statement in the listing registration form contains misrepresentations of material facts and omission of the necessary material factual information, making the registration form misleading and failing to do so in accordance with the rules and regulations governing the preparation of such documents. Full disclosure. Specifically, the false and/or misleading statements and/or undisclosed statements given by the defendant include: (1) Wei will not build his own production plant, but will continue to rely on a little-known Chinese state-owned Car manufacturer - Jianghuai Automobile Group Co., Ltd., or "Jianghuai Automobile" - to manufacture its electric vehicles; (2) the government's reduction in subsidies for electric vehicles will seriously affect the sales volume of Weilai; and (3) The defendant’s statement of Weilai’s business, operations and prospects is false and misleading at all relevant times.
The truth gradually surfaced
42. On March 5, 2019, after the close, the defendant released Weilai’s fourth quarter earnings report for 2018. In this financial report, the defendant disclosed:
- Weilai will terminate the agreement with the Shanghai government to build its own manufacturing plant in Shanghai and will continue to cooperate with JAC to produce the company's cars.
- Weilai's delivery of electric vehicles, from more than 3,000 in December 2018, to 1,805 in January 2019, and continued to drop to 811 in February 2019. Wei Lai revealed that the main reason for the slowdown in growth is that the market expects that the Chinese government's subsidies for electric vehicles will decrease in 2019.
43. After the news came out, Weilai’s share price fell by 3.77 US dollars or more than 37% on the price of March 5, 2019. By March 12, 2019, Weilai’s share price was about 6.39 US dollars per share. . Weilai's share price has fallen by 3.67% or down $0.23 from its IPO pricing. At the close of trading on March 14, 2019, Weilai's share price was about $6.03 per share, causing losses to investors.
Allegation 1: For all plaintiffs, it violates Section 11 of the Securities Law;
Allegation 2: For all plaintiffs, it violates the provisions of §12(a)(2) of the Securities Law;
Allegation 3: For all plaintiffs, it violates Section 15 of the Securities Law.
Editor in charge: Robot RF13015
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