Huazhu Group Ltd.
- Company Name
- Huazhu Group Ltd.
- Stock Symbol
- Class Period
- May 14, 2018 to August 28, 2018
- Motion Deadline
- December 7, 2018
- Central District of California
The complaint charges Huazhu and its Chief Executive Officer with violations of the Securities Exchange Act of 1934. Huazhu operates hotels in China. Founded in 2005, Huazhu has been ranked as the 12th largest hotel group globally. Huazhu currently owns and operates over 3,000 hotels across more than 350 cities in China, providing business and leisure travelers with high-quality, conveniently located hotel options ranging from upscale to economy.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose material adverse information regarding the Company’s business, operations, and prospects. Specifically, defendants failed to disclose to investors that the Company lacked adequate security measures to protect its customers’ information, which would cause the Company to be susceptible to increased litigation risk and higher expenses, and that, as a consequence, the Company’s goodwill would potentially suffer, leading to lower revenues. As a result of defendants’ false statements and/or omissions, Huazhu securities traded at artificially inflated prices during the Class Period, with its share price reaching a high of nearly $50 per share.
Then on August 28, 2018, media outlets reported that Chinese police were investigating a possible leak of client information from Huazhu. The reports stated that nearly 500 million pieces of customer-related information, including registration information, personal data, and booking records, had emerged in an online post. On this news, the price of the Company’s shares fell $1.55 per share, or more than 4%, to close at $33.98 per share on August 28, 2018. And as this news was absorbed by the market over the following days, the price of Huazhu shares continued to decline, falling another 8% to close at $31.03 per share by September 6, 2018.