Case Summary

VNET Group

NASDAQ: VNET

Case Details

  • Semerak v. VNET Group, Inc. et al.
  • Class Period:April 08, 2022 - February 15, 2023
  • Date Filed:December 26, 2023
  • Jurisdiction:U.S. District Court, Southern District of New York
  • Docket Number: 1:23cv11187
  • Lead Plaintiff Deadline: February 26, 2024
Days Left to
Seek Plaintiff
5

Overview

A class action lawsuit has been filed against VNET Group, Inc., (“VNET” or the “Company”) (NASDAQ: VNET) and certain of the Company’s current and former senior executive officers alleging violations of the Securities Exchange Act of 1934. The lawsuit is brought on behalf of all persons and entities who purchased or otherwise acquired VNET securities between April 8, 2022, and February 15, 2023, both dates inclusive (the “Class Period”) and investors have until February 20, 2024, to seek appointment as lead plaintiff of the VNET Group class action lawsuit.

VNET Group is a private internet and data center service provider which operates throughout China. The Company provides hosting and related services, including Data Center services, cloud services, and Virtual Private Network (“VPN”) services through which customers can connect to the internet in China. VNET is a holding company with operations primarily conducted by its subsidiaries and variable interest entities (“VIE”) and VIE subsidiaries.

The lawsuit alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that GenTao was experiencing financial difficulties and was at risk of defaulting on the Facility Agreement; (2) that, as a result, there was a substantial likelihood that Bold Ally would acquire Defendant Sheng Chen’s significant ownership stake in VNET; (3) that, to restore Defendant Sheng Chen’s voting interest in VNET, the Company would issue newly created shares to Defendant Sheng Chen, diluting investors’ interest; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

In August 2021, VNET’s co-founder, Josh Sheng Chen, and his companies entered into a $50.25 million margin loan facility with Bold Ally (Cayman) Limited (“Bold Ally”), pledging all of his shares in GenTao Capital Limited (“GenTao”) and certain companies as collateral (the “Facility Agreement”). Sheng Chen, GenTao, and their affiliates beneficially owned approximately 78.52 million VNET shares. On February 13, 2023, before the market opened, Bold Ally announced it would exercise its rights under the Facility Agreement following a default by GenTao and was entitled to 48,515,634 Class A ordinary shares (in the form of 8,085,939 American depositary shares, or “ADSs” or “shares”) and 27,757,992 Class B ordinary shares of the Company. On this news, the Company’s share price fell $0.20, or 3.2% on February 13, 2023, on unusually heavy trading volume.

The Company’s share price continued to decline by $1.09, or 17.8%, over the next consecutive trading session to close at $5.02 per-share on February 14, 2023, on unusually heavy trading volume. Then, on February 15, 2023, before the market opened, VNET disclosed that the board of directors had approved and authorized the issuance of up to 555,000 newly created Class D ordinary shares to the Executive Chairman of the Board, and that these shares would be granted a 500-to-1 vote per-share power. The Company stated this measure was required in order to “protect the Company’s interests and continued stability.” On this news, the Company’s share price fell $0.10, or 2%, to close at $4.92 per-share on February 15, 2023, on unusually heavy trading volume.

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If you purchased or otherwise acquired VNET (NASDAQ: VNET) securities between April 8, 2022, and February 15, 2023, inclusive, and suffered substantial losses, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page. 

You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at investors@dicellolevitt.com. 

The deadline to apply to the Court to serve as a lead plaintiff in the VNET Group lawsuit is February 20, 2024.

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