A class action was filed against 360 Digitech, Inc. and their senior executives by shareholders in the Southern District of New York on Tuesday for allegedly illegally collecting personal information and withholding that information from investors. These actions led to a sharp drop in the value of their shares after Chinese regulators opened a formal investigation.
360 Digitech operates a digital consumer credit platform under the 360 Jietiao brand in China, the complaint explained. The platform provides online consumer credit products to borrowers funded by institutional funding partners, as well as’ credit scoring, collection and other incremental services, as well as guarantee for loans. suffering “.
The complaint alleged that the defendants “made false and / or misleading statements, as well as failed to disclose material adverse facts regarding the business, operations and compliance policies of the company.” 360 Digitech would not have mentioned that they “had collected personal information in violation of the [Chinese] laws ”, and were exposed to an“ increased risk of regulatory control and / or enforcement action ”.
A week ago, 360 IOU, the company’s “core product”, was pulled from major app stores. This was because Chinese regulators were investigating their “customer data protection policies” and 360 IOU was one of thirteen platforms reviewed. The 360 Digitech share price fell by 21.48% on the same day. The plaintiffs claim that by withholding this information from the public, the defendants’ actions “were committed willfully or with reckless disregard for the truth”.
The plaintiffs are suing for two violations of Section 10 (b) of the Exchange Act, targeting all defendants and individual defendants, for “committing[ing] in a plan, scheme, conspiracy and course of action, by virtue of which they knowingly or recklessly engaged in acts, transactions, practices and business practices which functioned as fraud and deception on [the plaintiffs]. “