Chinese electric vehicle start-up Nio Inc. company logo is on display
on its initial public offering (IPO) day at the NYSE in New York
Wed, August 9, 2023
By Jody Godoy
(Reuters) - Nio Inc investors can proceed as a class in a lawsuit claiming the Chinese electric vehicle maker lied about building its own factory in Shanghai during its 2018 initial public offering, a U.S. judge has ruled.
The lawsuit in federal court in New York seeks damages from Nio, its executives and underwriters for a decline in share price after the carmaker said in March 2019 that it had scrapped plans to build the new factory it had said was "under construction" during the IPO.
U.S. District Judge Nicholas Garaufis issued an order late Tuesday certifying a class of all investors who bought Nio American Depositary Shares (ADS) in the September 2018 IPO, and a class of investors who purchased ADS between Oct. 8, 2018 and March 5, 2019.
The defendants have denied the allegations. Their attorneys did not immediately reply to requests for comment.
The ruling is one of the final hurdles for the investors before a trial in the case. Securities class actions rarely go to trial; those that are not dismissed typically result in settlements. The company may also ask the judge to rule in its favor without a trial.
The investors anticipated the factory would give Nio its own manufacturing capacity and alleviate its reliance on a Chinese state-owned manufacturer some analysts viewed as "third tier."
But construction had never started, the lawsuit alleges, citing former employees and the lack of necessary construction permits.
The investors also claimed Morgan Stanley, Goldman Sachs and several other underwriters failed to properly vet the company's statements.
When Nio disclosed the plant would not be built in March 2019, its ADS price dropped 30%, from around $10 to $7 per share, the investors said.
Nio ADS were trading at around $13.50 per share on Wednesday, down about 3.9% from Tuesday's closing price.The case is In re: NIO, Inc., Securities Litigation, U.S. District Court, Eastern District of New York, No. 19-cv-01424.
(Reporting by Jody Godoy in New York; editing by Jonathan Oatis)
Wed, August 9, 2023
By Jody Godoy
(Reuters) - Nio Inc investors can proceed as a class in a lawsuit claiming the Chinese electric vehicle maker lied about building its own factory in Shanghai during its 2018 initial public offering, a U.S. judge has ruled.
The lawsuit in federal court in New York seeks damages from Nio, its executives and underwriters for a decline in share price after the carmaker said in March 2019 that it had scrapped plans to build the new factory it had said was "under construction" during the IPO.
U.S. District Judge Nicholas Garaufis issued an order late Tuesday certifying a class of all investors who bought Nio American Depositary Shares (ADS) in the September 2018 IPO, and a class of investors who purchased ADS between Oct. 8, 2018 and March 5, 2019.
The defendants have denied the allegations. Their attorneys did not immediately reply to requests for comment.
The ruling is one of the final hurdles for the investors before a trial in the case. Securities class actions rarely go to trial; those that are not dismissed typically result in settlements. The company may also ask the judge to rule in its favor without a trial.
The investors anticipated the factory would give Nio its own manufacturing capacity and alleviate its reliance on a Chinese state-owned manufacturer some analysts viewed as "third tier."
But construction had never started, the lawsuit alleges, citing former employees and the lack of necessary construction permits.
The investors also claimed Morgan Stanley, Goldman Sachs and several other underwriters failed to properly vet the company's statements.
When Nio disclosed the plant would not be built in March 2019, its ADS price dropped 30%, from around $10 to $7 per share, the investors said.
Nio ADS were trading at around $13.50 per share on Wednesday, down about 3.9% from Tuesday's closing price.The case is In re: NIO, Inc., Securities Litigation, U.S. District Court, Eastern District of New York, No. 19-cv-01424.
(Reporting by Jody Godoy in New York; editing by Jonathan Oatis)
No comments:
Post a Comment