Two lawsuits against social e-commerce firm Pinduoduo alleging that the company misled investors have been accepted by US courts in California and New York.
The cases were filed as a result of investors losing money due information they claim was misrepresented or concealed in Pinduoduo’s listing documents, according to local media.
Shortly after Pinduoduo’s Nasdaq listing, Chinese regulators launched an investigation into the company for selling counterfeit goods. The announcement caused the company’s share price to plummet, resulting in losses for investors.
This marks the third suit against the company that has been filed in the US. In July, a case was accepted by a New York court before Pinduoduo’s listing. Chinese firm Daddy’s Choice planned to sue the company for knowingly selling products that violated its trademarks. The company said it had informed the e-commerce giant of the problem over the course of a year but received no response.
Additionally, after Chinese regulators announced their investigation, a group of law firms said they would be looking into whether Pinduoduo withheld information from investors and whether the company and its representatives violated US federal laws.
Pomerantz LLP, one of the firms that were involved in the investigation, is now representing investors in the latest round of lawsuits. Other firms include Wolf Haldenstein Adler Freeman & Herz LLP. Also, an as of yet uncertified class action suit has been filed against the company by the Schall Law Firm.
This week, Pinduoduo said in an open letter that between August 2 and August 9 it had removed over 4 million listings of counterfeit goods and closed more than 1,000 stores on its platform. The company announced it had also reported 36 companies to the market regulator in Shanghai’s Changning District.
“We are fully aware that problems that existed in the past should not continue to exist in the future,” the company said in the letter, laying out plans to combat counterfeit goods in the future.
However, as losses have already been incurred and with three lawsuits having been accepted by US courts, the company’s intended changes may have come too late.