Source: Wall Street Journal's Risk & Compliance Journal
Plaintiffs in a class action suit against Alibaba Group Holding allege the company failed to disclose meetings with a Chinese regulatory body that later accused it of misconduct, but only after its record-setting $25 billion initial public offering last year. However, even if Alibaba is found to have committed misconduct, enforcing a U.S. judgment against the company will be difficult, according to Corporate & Securities partner and China practice leader Tom Shoesmith. Alibaba is a VIE company whose assets are in Chinese operating entities, and foreign court judgments are not enforceable in China.
“You might win the lawsuit, but unless you can find assets to enforce against in the U.S., you’re out of luck,” Shoesmith told the Wall Street Journal’s Risk & Compliance Journal blog. Read the full article here (subscription required).