Key Takeaways
Multiple law firms have announced a securities class action lawsuit against Lufax Holding Ltd. on behalf of investors who purchased securities between April 7, 2023, and January 26, 2025, with a lead plaintiff deadline of May 20, 2026.
"We're investigating whether Lufax intentionally violated applicable accounting rules and disclosure requirements when it comes to full transparency about related-party transactions," said Reed Kathrein, a Hagens Berman partner leading the firm's investigation.
The lawsuit follows Lufax's January 27, 2025, announcement that it had removed its auditor, PricewaterhouseCoopers (PwC), after PwC expressed concerns about potential undisclosed related-party transactions. This news triggered a nearly 14% sell-off in the price of Lufax American Depositary Shares. PwC has since stated that its audit opinions for 2022 and 2023 should no longer be relied upon.
The core of the allegations is that Lufax failed to disclose related-party transactions, which, when revealed, led to a crisis of confidence and significant investor losses. The subsequent restatement of financials confirmed that 2022 total income was overstated by RMB 493.8 million, and net profit was reduced by RMB 917.0 million for 2022 and RMB 81.4 million for 2023.
The class action complaint alleges that Lufax lacked adequate internal controls, and as a result, certain financial results were materially misstated. Several law firms, including Rosen Law Firm, Bernstein Liebhard LLP, Hagens Berman, and Faruqi & Faruqi, LLP, are representing investors in the class action.
The lawsuit represents a significant contingent liability for Lufax, which could result in financial damages and further reputational harm. Investors will be closely watching for the court's decision on the class certification and any potential settlement discussions.
This article is for informational purposes only and does not constitute investment advice.
