Baidu, Inc. Class Action Lawsuit
- Company Name
- Baidu, Inc.
- Stock Symbol
- Class Period
- April 8, 2016 to August 13, 2020
- 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.
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