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VNET Group, Inc. Class Action Lawsuit - VNET

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Case Summary

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The VNET class action lawsuit seeks to represent purchasers or acquirers of VNET Group, Inc. (NASDAQ: VNET) securities between April 8, 2022 and February 15, 2023, inclusive (the “Class Period”).  Captioned Semerak v. VNET Group, Inc., No. 23-cv-11187 (S.D.N.Y.), the VNET class action lawsuit charges VNET and certain of its top current and former executive officers with violations of the Securities Exchange Act of 1934.

If you suffered substantial losses and wish to serve as lead plaintiff of the VNET class action lawsuit, please provide your information in the form on this page.  You can also contact attorney J.C. Sanchez of Robbins Geller by calling 800/449-4900 or via e-mail at jsanchez@rgrdlaw.com.  Lead plaintiff motions for the VNET class action lawsuit must be filed with the court no later than February 26, 2024.

CASE ALLEGATIONS: VNET is a private internet and data center service provider which operates throughout China.  According to the complaint, as of February 28, 2022, VNET’s co-founder, defendant Josh Sheng Chen, beneficially owned approximately 78.52 million VNET shares individually and through his sole ownership of certain companies, including GenTao Capital Limited.  The complaint further alleges that on August 19, 2021, Sheng Chen and his companies entered into a $50.25 million margin loan facility with Bold Ally (Cayman) Limited, pledging all of his shares of GenTao and other companies as collateral, thus effectively pledging a significant percentage of his VNET shares as collateral (the “Facility Agreement”).

The VNET class action lawsuit alleges that throughout the Class Period defendants made false and/or misleading statements and/or failed to disclose that: (i) GenTao was experiencing financial difficulties and was at risk of defaulting on the Facility Agreement; (ii) as a result, there was a substantial likelihood that Bold Ally would acquire defendant Sheng Chen’s significant ownership stake in VNET; and (iii) to restore Sheng Chen’s voting interest in VNET, VNET would issue newly created shares to Sheng Chen, diluting investors’ interest.

The VNET class action lawsuit further alleges that on February 13, 2023, Bold Ally announced it would exercise its rights under the Facility Agreement following a default by GenTao and was entitled to 48,515,634 Class A ordinary shares and 27,757,992 Class B ordinary shares of VNET.  On this news, the price of VNET shares fell more than 20% over two trading sessions, according to the complaint.

Then, as the complaint further alleges, on February 15, 2023, VNET disclosed that its Board of Directors had approved and authorized the issuance of up to 555,000 newly created Class D ordinary shares to the Executive Chairman of the Board, and that these shares would be granted a 500-to-1 vote per share power.  The VNET class action lawsuit alleges that on this news, the price of VNET shares fell.

THE LEAD PLAINTIFF PROCESS: The Private Securities Litigation Reform Act of 1995 permits any investor who purchased or acquired VNET securities during the Class Period to seek appointment as lead plaintiff of the VNET class action lawsuit.  A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class.  A lead plaintiff acts on behalf of all other class members in directing the VNET class action lawsuit.  The lead plaintiff can select a law firm of its choice to litigate the VNET class action lawsuit.  An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff of the VNET class action lawsuit. 

ABOUT ROBBINS GELLER RUDMAN & DOWD LLP: Robbins Geller Rudman & Dowd LLP is one of the world’s leading complex class action firms representing plaintiffs in securities fraud cases.  The Firm is ranked #1 on the most recent ISS Securities Class Action Services Top 50 Report for recovering more than $1.75 billion for investors in 2022 – the third year in a row Robbins Geller tops the list.  And in those three years alone, Robbins Geller recovered nearly $5.3 billion for investors, more than double the amount recovered by any other plaintiffs’ firm.  With 200 lawyers in 10 offices, Robbins Geller is one of the largest plaintiffs’ firms in the world and the Firm’s attorneys have obtained many of the largest securities class action recoveries in history, including the largest securities class action recovery ever – $7.2 billion – in In re Enron Corp. Sec. Litig.

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