On a certain date in the United States, Alibaba Group reached a settlement agreement in a shareholder class action lawsuit. According to the agreement, Alibaba has agreed to pay $2.5 billion (approximately RMB 17.5 billion) to resolve a class action lawsuit initiated by U.S. investors. However, Alibaba denies any allegations of wrongdoing, liability, misconduct, or harm, stating that the settlement is merely to avoid further costs and disruptions from litigation. At the same time, Alibaba noted in its announcement that the settlement is subject to many conditions, including court approval, and does not constitute an admission or determination that any legal basis exists for the claims raised in the lawsuit.

The settlement documents show that this is the twenty-first largest securities class action settlement in the region since the Private Securities Litigation Reform Act was enacted nearly three decades ago, and one of the top fifty securities class action settlements in the United States. Lawyers stated that Chinese investors may also be eligible for this settlement amount.

Why the High Settlement? This is a securities class action lawsuit brought by investors accusing Alibaba of making material misrepresentations regarding its alleged monopolistic "exclusive conduct" and the initial public offering of Ant Group. The plaintiffs believe that due to Alibaba's false and misleading statements, Alibaba's stock price was artificially inflated. During the determination process, the court dismissed the plaintiffs' challenge to Alibaba's statements about Ant Group, with the key discussions focusing on whether Alibaba engaged in monopolistic behavior and made misrepresentations.

The settlement document mentions that the antitrust claim involves complex economic and regulatory issues in the e-commerce market and China's antitrust law, making this claim a significant challenge. Public information shows that in [month and year], Xinhua News Agency reported that the State Administration for Market Regulation (SAMR) filed an investigation into Alibaba Group Holding Limited for alleged monopolistic practices such as "two choices one" based on a report. In [month and year], SAMR announced that it had imposed a行政处罚 on Alibaba Group Holding Limited for the monopolistic practice of "two choices one" in the domestic online retail platform service market, with a fine of 18.228 billion yuan, and required Alibaba to submit self-examination compliance reports to SAMR for three consecutive years. In [month and year], the State Administration for Market Regulation stated that Alibaba Group had completed its three-year rectification.

Senior Partner of Shanghai Dacheng Law Firm, You Yunting, analyzed that from the perspective of Alibaba accepting the settlement, since Alibaba previously stated that it did not constitute anti-monopoly behavior but eventually received a penalty from the State Administration for Market Regulation, if it were to proceed with litigation, Alibaba indeed faces a significant risk of compensation. From the perspective of the plaintiffs, the process of claiming compensation is very lengthy, and a large amount of evidence needs to be obtained in China, so the plaintiffs also face the risk of failing to claim compensation. The settlement documents also mentioned that even if the plaintiffs determine liability, they also face the risk of proving the causal relationship of their significant losses.

Ultimately, the amount of this settlement, $0.1 billion, accounts for 15% of the maximum potential compensation of $0.7 billion in this case. This ratio is more than double the average estimated compensation of 7% in securities class actions in 2019, 2020, and 2021, and far exceeds the average ratio of 10% of the maximum compensation in securities class action settlements where investors lost over $1 billion over the past decade.

It is worth noting that, according to a journalist's observation, in this year's quarterly financial report of Alibaba as of the end of June, a provision of 2.2 billion RMB (317 million USD) has been shown for a shareholder class action lawsuit. Are Chinese investors included? Under the right conditions, Alibaba's US stock investors in China are also expected to "share" this substantial settlement fund.

The settlement document indicates that the "Settlement Class" in this class action refers to all individuals and entities that purchased or otherwise acquired Alibaba American Depository Shares during the period from [Month/Year] to [Month/Year], inclusive. However, the "Settlement Class" does not include: (1) individuals and entities that did not suffer compensable losses; (2) officers and directors of Alibaba, both current and former, during the relevant periods, their immediate family members, and their legal representatives, heirs, successors, or assigns, as well as any entity that at any time was or had been controlled by the defendants or any individual excluded under this (2) provision; (3) individual defendants who are residents or any trust established for the benefit of the individual defendants and their immediate family members (or their members); (4) current and former parents, subsidiaries, assignees, successors, and predecessors of Alibaba; (5) liability insurers of the defendants; and any individual or entity that has requested to be excluded from the Settlement Class by the court.

You Yunting stated that, based on general experience, after completing the settlement process or receiving the settlement funds from Alibaba, the law firm representing the lawsuit will post the information on its website. Investors can fill out forms, submit proofs, and after passing the review, they will receive corresponding compensation for their losses. During this period, investors can pay attention to relevant email notifications from securities institutions or log in to the relevant law firms themselves. However, You Yunting shared a personal experience of his own. Previously, he received an email from Amazon stating that he could claim compensation for a product he purchased due to false advertising statements. The email contained a link to a law firm, where he submitted screenshots and order numbers and passed the review. After more than half a year, he received a personal check from the United States, but by the time it arrived, the check had already expired. Although he obtained a second check after communicating with Amazon, the second check also expired upon arrival. This means that under various circumstances, domestic investors who meet the criteria may face more difficulties in obtaining compensation.