Alibaba Group Holding Limited (NYSE:BABA) will have to deal with a lawsuit brought by its investors at the New York Southern District Court over the suspended IPO and listing of Ant Group, the operator of digital payments platform Alipay.

The complaint against Alibaba was filed with the Court on November 13, 2020. The case is brought by plaintiff Laura Ciccarello, individually and on behalf of all others similarly situated. This is a class action on behalf of persons and entities that purchased or otherwise acquired Alibaba securities between October 21, 2020 and November 3, 2020, inclusive (the “Class Period”).

Let’s note that Alibaba owns a 33% equity interest in Ant Group. On July 20, 2020, Ant Group announced that it had begun the process of a concurrent initial public offering (IPO) on the Shanghai and Hong Kong stock exchanges. On October 26, 2020, Ant Group priced its IPO and was set to raise $34.5 billion.

On November 3, 2020, the IPO was suspended because Ant Group “may not meet listing qualifications or disclosure requirements due to material matters”

On this news, Alibaba’s share price fell $25.27, or 8%, to close at $285.57 per share on November 3, 2020, on unusually heavy trading volume.

According to the complaint, during the Class Period, the defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about Alibaba’s business, operations, and prospects.

Specifically, the defendants are alleged to have failed to disclose to investors that Ant Group did not meet listing qualifications or disclosure requirements for certain material matters. Also, the plaintiff alleges that the defendants failed to inform investors about certain impending changes in the Fintech regulatory environment would impact Ant Group’s business.

Further, as a result of the foregoing, Alibaba failed to disclose information that Ant Group’s IPO was reasonably likely to be suspended.

According to the complaint, the defendants’ positive statements about Alibaba’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. The plaintiff alleges that, as a result of the defendants’ wrongful acts and omissions, and the precipitous decline in the market value of Alibaba’s securities, the plaintiff and other Class members have suffered significant losses and damages.

The complaint also names Daniel Zhang, Alibaba’s Chief Executive Officer, and Maggie Wu, Alibaba’s Chief Financial Officer, as defendants. The Complaint alleges that Zhang and Wu because of their positions with Alibaba, possessed the power and authority to control the contents of the company’s reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors.

The plaintiff argues that Zhang and Wu had the ability and opportunity to prevent the issuance of misleading materials or could cause them to be corrected. Because of their positions and access to material non-public information available to them, Zhang and Wu allegedly knew that the adverse facts had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading. The individual defendants are accused of being liable for the false statements.

The plaintiffs seek, inter alia, awarding compensatory damages in favor of the plaintiff and the other Class members against all defendants, jointly and severally, for all damages sustained as a result of the defendants’ wrongdoing, in an amount to be proven at trial.