JD.com, one of China’s largest electronic commerce companies, could be facing a rash of class-action lawsuits in the United States after its chairman and CEO Liu Qiangdong (also known as Richard Liu) was arrested in Minnesota on a first-degree rape accusation.
So far, three U.S. investor rights law firms have already announced that they are investigating potential securities claims on behalf of shareholders of JD.com (NASDAQ:JD).
On August 31, Liu, a 44-year-old Chinese billionaire, was arrested in Minnesota on suspicion of sexual assault involving a student of the University of Minnesota. Liu was released the following day, and his company on September 2 issued a statement through its Weibo account, denying any wrongdoing on Liu’s part.
“During a business trip to the United States, Mr. Liu was questioned by police in Minnesota in relation to an unsubstantiated accusation,” the statement said. “The local police found no substance to the claim against Mr. Liu after investigation, and he was subsequently to resume his business activities as originally planned.”
“We will take the necessary legal action against false reports or rumors,” the statement added.
On September 3, the company released a follow-up statement, emphasizing that Liu was “released soon after investigation without any charges and without requirement for bail.”
Liu has returned to China and resumed leadership of the company, the statement said.
However, Minneapolis Police Department spokesman John Elder told the press that it is not yet decided whether charges would be brought against Liu. The alleged assault would be a felony, Elder added.
On the same day, China’s Foreign Ministry also responded to Liu’s case, claiming that it had noted the incident and launched an investigation accordingly.
On September 4, the police records were made public, shedding more light on Liu’s case. The records showed that Liu was arrested on a first-degree rape charge. According to the Minnesota government, a first-degree rape charge, described as “sexual penetration,” is considered the most severe charge of criminal sexual conduct.
If charged and convicted, Liu could face a prison sentence of up to 30 years and a fine of up to $40,000.
Due to the incident, JD.com’s stock price on the Nasdaq fell 5.97 percent, or $1.87 per share, to close at $29.43 per share on September 4, hitting an 18-month low.
Thus, three U.S. law firms — Rosen Law Firm, Pomerantz LLP, and The Schall Law Firm — are now encouraging JD.com’s investors to file a class action lawsuit to recover their losses.These law firms argued that JD.com may have issued materially misleading business information to the investing public on Liu’s case.