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Baidu, Inc. Class Action Lawsuit

Case Summary

Company Name
Baidu, Inc.
Stock Symbol
BIDU
Class Period
April 8, 2016 to August 13, 2020
Court
Eastern District of New York

The Baidu, Inc. class action lawsuit charges Baidu and certain of its officers with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers of Baidu publicly traded securities between April 8, 2016 and August 13, 2020, inclusive (the “Class Period”).  The Baidu class action lawsuit was commenced on August 19, 2020 in the Eastern District of New York and is captioned Alagappan v. Baidu, Inc., No. 20-cv-03794.

Baidu provides Internet search services in China and internationally.  Baidu operates through two segments, one of which is iQIYI.  Baidu’s iQIYI segment provides online entertainment service, including original and licensed content, membership services, and online advertising services.

The Baidu class action lawsuit alleges that during the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (i) Baidu misrepresented the financial and business condition of iQIYI; (ii) iQIYI had inadequate controls; and (iii) as a result, defendants’ public statements were materially false and/or misleading at all relevant times.

On April 7, 2020, Wolfpack Research released a report detailing, among other things, how Baidu’s iQIYI segment had misled investors and failed to disclose pertinent information, including that: (i) iQIYI was overstating its user numbers; (ii) iQIYI was inflating its revenues; (iii) iQIYI was inflating expenses and prices of assets to conceal its revenue inflation; and (iv) iQIYI’s misleading financial reporting created the appearance of a cash generative company.  On this news, the price of Baidu’s American Depositary Shares (“ADSs”) fell nearly 4.4%.

Then, on August 13, 2020, Baidu’s iQIYI segment issued a press release announcing that the U.S. Securities and Exchange Commission’s “Division of Enforcement is seeking the production of certain financial and operating records dating from January 1, 2018, as well as documents related to certain acquisitions and investments that were identified in a report issued by short-seller firm Wolfpack Research in April 2020.”  Baidu’s iQIYI segment further revealed that “shortly after the publication of the Wolfpack Report, the Company engaged professional advisers to conduct an internal review into certain of the key allegations in the Wolfpack Report and to report their findings to the Company’s Audit Committee.” On this news, Baidu’s ADS price an additional 6.3%, damaging investors.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

Class Period: April 8, 2016 - August 13, 2020
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