The Chinese online company, Alibaba has faced accusations since long for being a haven for counterfeiters that include luxury brands such as Gucci and Yves Saint Laurent.
Global transactions in fake and pirated goods could reach $500 billion annually as stated by the US President Donald Trump, who has ordered a crackdown on online counterfeiting.
Companies like Alibaba, Amazon.com and e-Bay have policies banning counterfeiting and these companies also highlight their investments to impede this practice.
But recently, the Chinese e-commerce giant has been accused of not stopping such counterfeiting on its website and also concealing of the lawsuit that was imposed upon it.
This US lawsuit faults the Chinese e-commerce company for concealing a regulatory warning about its ability to stop counterfeiting before going public in 2014. So now the Alibaba Group Holding has affirmed of paying $250 million in order to settle this lawsuit.
Having being accused of securities fraud for failing to disclose it had met with China’s State Administration for Industry and Commerce in July 2014, the Alibaba Group is now under scanner.
After the issuance of a white paper based on concerns raised at the meeting, Alibaba’s American Depository Shares fell 12.8 percent on January 28 and 29, 2015. The white papers also stated that many products sold on Alibaba websites were infringed trademarks.
The SAIC delayed the release of its findings in order to not affect the IPO as stated by the white paper. Claims against Alibaba officials have also been resolved by the accord that awaits court approval. The claims include billionaire founder and Exeutive Chairman Jack Ma.
However, any wrongdoing has been denied by Alibaba and it has stated that the settlement ends all pending securities litigation against the company, its executive officers and its directors.
The plaintiffs’’ lawyers in the court paper have called the accord as “inherently fair, reasonable and adequate”. They have also cited potential hurdles in showing that Alibaba made false statements and intended to commit fraud.
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