Action against Alibaba calls for observance of market rules

People ride a double bicycle past a logo of the Alibaba Group at the company's headquarters on the outskirts of Hangzhou, Zhejiang province Nov 10, 2014.[Photo/Agencies]

Days after a dispute broke out between the State Administration for Industry and Commerce and Alibaba Group, the corporation that runs taobao.com, China's equivalent of eBay, on whether the latter should be responsible for fake goods sold on its platform, an Alibaba shareholder launched a class action against Alibaba in New York. According to reports, the company listed in New York Stock Exchange was sued for misstatement of its business and risks, which led to investors' losses. Comments:

When Alibaba decided to join the US stock market last September, there were warnings that it lacked knowledge of US stock market rules. Any move of a listed enterprise will be under the magnifying glass of investors and supervisors, and it might face a lawsuit for any misconduct. Most Chinese entrepreneurs fail to realize this fundamental difference between China and the United States and they could pay a huge price for that.

Zhu Lei, an associate professor at the Shanghai Advanced Institute of Finance, Shanghai Jiaotong University, Feb 6

Concerning the protection of investors' interests, the Chinese stock market lags far behind its US counterpart. I hope the supervising agencies can learn from the regulations and strengthen protection, which is their legal duty.

Yan Yiming, a Shanghai-based lawyer, Feb 4

Had Alibaba not been listed on the US stock market, the supervision against fake goods on its platform would still be weak, with consumers' rights ignored. But this capital giant cannot afford to ignore the challenge from the market. The market's ability to purify itself should never be underestimated - sometimes it does well where administrative supervision fails.

Investment Express newspaper, Feb 5

The class action against Alibaba should remind China it needs to strengthen its IPO registration system. Currently, the draft regulation requires that companies should clearly list information about their financial and other situations, but the specific requirements are quite vague and there is a lack of punitive measures for any wrongdoing. Without such supervision as class actions, the problem of false information might do China's stock market great harm.

Shanghai Securities News, Feb 6

The legal action against Alibaba faces long odds and any judgment may be unenforceable.

Wall Street Journal, Feb 6