Lizhi Inc. Class Action Lawsuit

Company Name
Lizhi Inc.
Stock Symbol
Class Period
Purchasers of Lizhi American Depositary Shares pursuant and/or traceable to the registration statement issued in connection with Lizhi’s IPO
Eastern District of New York

Case Summary

The Lizhi Inc. class action lawsuit charges Lizhi, certain of its officers and directors, and the underwriters of its January 17, 2020 initial public offering (“IPO”) with violations of the Securities Act of 1933.  The Lizhi class action lawsuit seeks to represent purchasers of Lizhi American Depositary Shares (“ADSs”) pursuant and/or traceable to the registration statement issued in connection with Lizhi’s IPO (the “Registration Statement”).  The Lizhi class action lawsuit was commenced on January 20, 2021 in the Eastern District of New York and is captioned Gutman v. Lizhi Inc., No. 21-cv-00317.

Lizhi operates a social audio platform for user-generated content in China.

On August 6, 2019, Lizhi filed with the U.S Securities and Exchange Commission (“SEC”) a confidential draft registration statement on Form F-1 which incorporating and in combination with related documents on Form F-6 would be used for the IPO following a series of amendments in response to SEC comments.  The IPO’s Registration Statement was declared effective on January 16, 2020.  Thereafter, on January 17, 2020, Lizhi filed a prospectus for the IPO on Form 424B4, which incorporated and formed part of the Registration Statement (the “Prospectus” and with the Registration Statement, the “Offering Documents”).  The Registration Statement was used to sell to the investing public more than 4.1 million Lizhi ADSs at $11.00 per ADS.  Defendants generated approximately $45 million in gross offering proceeds from their sale of Lizhi’s securities in the IPO.

The Lizhi class action lawsuit alleges that the Offering Documents used to effectuate Lizhi’s IPO were negligently prepared and, as a result, contained untrue statements of material facts or omitted to state other facts necessary to make the statements made therein not misleading.  Specifically, the Offering Documents failed to disclose Lizhi’s direct and escalating exposure to the devastating coronavirus epidemic, then already raging in China and engulfing its business, customers, and employees at the time of the IPO.

On March 12, 2020, Lizhi filed a Form 6-K report with the SEC, admitting that Lizhi had already been impacted by the COVID-19 pandemic, stating in relevant part, that the “COVID-19 outbreak has caused, and may continue to cause, companies in China, including us, to implement temporary adjustment of work schemes allowing employees to work from home” and that “[t]he extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain or treat its impact, among others.”

Then, on April 20, 2020, Lizhi filed a Form 20-F annual report with the SEC, admitting that the COVID-19 pandemic was negatively impacting its business prior to the IPO.  By the commencement of the Lizhi class action lawsuit, Lizhi shares were trading below $4 per share, a decline of over 63% from the offering price.

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 eight 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.

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