- Nationally renowned business litigation and trial firm Reid
Collins & Tsai LLP leads prosecution of shareholder derivative
action against Fang Holdings Limited's directors and
controllers.
- Court ruled that shareholder derivative action will proceed
against insiders who "used and manipulated the New York financial market."
- Ruling is one of first shareholder derivative suits
involving Cayman corporations to survive dismissal since
Reid Collins' landmark Renren, Inc.
shareholder derivative litigation.
NEW
YORK, May 14, 2024 /PRNewswire/ -- National
trial firm Reid Collins & Tsai LLP ("Reid Collins") today announces a victory
obtained in a shareholder derivative action brought on behalf of
Fang Holdings Limited ("Fang" or the "Company"), a leading real
estate Internet portal in China
that is incorporated in the Cayman
Islands. The action seeks nine figure relief against Fang
insiders and their affiliated entities for alleged
breaches of fiduciary duty and other misconduct in a complex scheme
to enrich themselves and act in bad faith against Fang's best
interests.
The Hon. Andrew Borrok of the New
York Supreme Court denied Defendants' motions to dismiss the action
on May 2, 2024, citing Plaintiffs'
"well pled amended complaint" which outlined how Fang's foreign
insiders "used and manipulated the New
York financial market in a multi-step Transaction to loot
Fang [] and enrich themselves in breach of their fiduciary
duties."
Background
The Defendants in the action include two of Fang's inside
Directors – Vincent Tianquan Mo and Richard
Jiangong Dai (Mo's nephew and his successor as Chairman of
Fang) – and affiliated entities controlled by Mo and/or
Dai.
Fang, a Chinese company incorporated in the Cayman Islands, went public in September 2010 with American Depositary Shares
listed on the New York Stock Exchange (NYSE). As summarized in
the Court's order denying Defendants' motion to dismiss, the
"Transaction foisted upon Fang" by Defendants included: (i) a
spin-off of a subsidiary (China Index Holdings Limited) ("Spinco")
in New York; (ii) causing Fang to
purchase Spinco shares "both on the New York Market (which the
defendants first artificially inflated and then later artificially
deflated)" and from the Defendant Directors' affiliates "at nearly
double the then-market prices in New
York"; (iii) causing Fang to suffer NYSE delisting to
depress value of Spinco shares to buy them on the cheap; and (iv)
orchestrating a take private transaction of Spinco in New York. The net result was that "Mo and Dai
forced Fang to shell out approximately $130
million to buy a 35.8% minority interest" in China Index Holdings, which Fang "had owned
outright (100%) just a few years prior" so that "Mo and Dai could
line their pockets…at Fang's expense."
Echoes of "Renren" – Reid
Collins has prior success holding foreign individuals and
entities accountable in U.S. courts
In denying Defendants' motions to dismiss and finding that
New York courts have personal
jurisdiction, the court observed that the precedent-setting
Renren, Inc. shareholder derivative litigation, in which
Reid Collins was lead counsel for
the derivative plaintiffs, was "instructive," noting that "[g]iven
the similarities between Renren and this case, the facts of
Renren bear recitation." As in Renren (in which
Reid Collins led the negotiation of
a $300 million settlement),
Fang involves alleged breaches of fiduciary
duties by insiders of companies incorporated in Cayman Islands that are headquartered in
China. In both cases, the
alleged misconduct flowed through New York and New
York's capital markets. Citing the similarities with
Renren, the Court concluded that "the same result is
required" in Fang and found that Defendants were subject to
personal jurisdiction.
The Fang shareholder derivative action follows
Reid Collins' prior success in
prosecuting the Renren shareholder derivative action in
New York state court to prevent
abuses of New York capital markets
involving companies incorporated in the Cayman Islands and headquartered
abroad.
Reid Collins represents
shareholder derivative Plaintiffs Oasis Investments II Master Fund
Limited and Lorelei NCC Inc.
The case is captioned Oasis Investments II Master Fund Ltd.,
Lorelei NCC Inc. v. Vincent Tianquan Mo, et al, No. 652607/2023
(N.Y. Sup. Ct.)
About Reid Collins
Reid Collins & Tsai LLP is
one of the nation's leading plaintiffs' trial firms, litigating
complex business disputes and achieving billions of dollars in
settlements and judgments for its clients. Its team is comprised of
accomplished trial lawyers who have extensive experience
prosecuting financial fraud, corporate wrongdoing,
bankruptcy and insolvency related litigation, employment and
partnership disputes, professional liability claims, and
cross-border disputes. The firm represents fund managers, investor
groups, trustees, receivers, liquidators, international banks,
companies, governmental entities, and individuals in federal and
state courts across the country.
For more information visit www.reidcollins.com
Austin | Dallas | New
York | Washington D.C. |
Wilmington
Contact: Alexander Coxe | 212.365.4792 |
acoxe@reidcollins.com
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