The Chinese ride-hailing company, Didi Global, is going to be sued in a U.S. court on charges that it misled investors by hiding information and defying an order from the Chinese government to delay the company’s 2021 IPO until cybersecurity and privacy issues were fixed.
U.S. District Judge Lewis Kaplan of Manhattan federal court ruled on Thursday in a 54-page judgment that stated investors who filed the proposed class action convincingly claimed that Didi and other executives meant to deceive them into raising over $4.4 billion in the June 30, 2021 IPO.
The offering valued all of Didi at about $67.5 billion.
Kaplan said the alleged desire to sell American depositary shares before a looming government crackdown on Chinese technology companies gave Didi and the officials a “concrete and personal economic motive” to go public before “the window for high valuation Chinese IPOs in the United States” closed.
Lawyers for Didi did not immediately respond to requests for comment. The investors’ lawyers did not immediately respond to similar requests.
Kaplan also refused to dismiss claims against banks that helped Didi go public.
Shares of Didi tumbled in July 2021 as China’s cyberspace regulator, the Cyberspace Administration of China, banned it from registering new customers and required the removal of the Didi Travel app from smartphone app stores.
Didi announced plans in December 2021 to delist the U.S.-listed shares. The regulator fined Didi $1.2 billion the following July over the episode.
Didi’s market value is now about $19 billion, according to LSEG data.
The case is In re Didi Global Inc Securities Litigation, U.S. District Court, Southern District of New York, No. 21-05807.
