We secured dismissals of state and federal securities cases on behalf of Chinese audio platform Lizhi

On October 1, 2022, Judge LaShann DeArcy Hall of the United States District Court for the Eastern District of the New York granted in full Davis Polk’s motion to dismiss a putative securities class action filed against Davis Polk’s client, Lizhi Inc., the largest user-generated audio platform in China. The dismissal with prejudice – coupled with an earlier dismissal in March 2022 of a similar case filed in New York state court – hands Lizhi a complete victory in all of the securities litigation that followed its 2020 IPO.

The complaint in the federal case was brought on behalf of a putative class of purchasers of Lizhi stock, asserting claims under sections 11, 12 and 15 of the Securities Act of 1933. Lizhi completed its IPO in January 2020, shortly after the very first COVID-19 cases were beginning to appear in China. The complaint alleged that Lizhi failed to sufficiently disclose certain alleged facts concerning the existence of the COVID-19 pandemic and its impact on the company.

In granting Lizhi’s motion to dismiss, Judge DeArcy Hall accepted Davis Polk’s argument in full that, at the time of the IPO, “‘the risk of COVID-19 was neither known nor knowable,’ and therefore, Plaintiff has failed to establish that the Registration Statement ran afoul of Items 303 and 105.” The court also denied the plaintiff’s request for leave to amend the complaint.

This is a total victory for Davis Polk’s client in one of the first securities actions brought against a Chinese company in the wake of the COVID-19 pandemic.

The Davis Polk litigation team includes partner Edmund Polubinski and counsel Jonathan K. Chang. Members of the Davis Polk team are based in the New York and Hong Kong offices.