Pomerantz Appointed Lead Counsel in 1Globe Capital Securities Litigation
On October 19, 2022, U.S. District Judge Nathanial M. Gorton of the District of Massachusetts appointed Pomerantz LLP as Lead Counsel on behalf of MW Gestion – the Lead Plaintiff, and the class, in In re 1Globe Capital LLC Sec. Lig., 22-cv-11315 (D. Mass.). This securities class action alleges that 1Globe Capital LLC ("1Globe" or the "Company") misled the market in connection with their battle for control of Sinovac Biotech Ltd. ("Sinovac").
1Globe is a family investment office, owned and controlled by Defendant Jiaqiang Li ("Li"), that focuses on investment in public and private companies in the healthcare and high-tech sectors. Sinovac is a biopharmaceutical company that focuses on researching, developing, manufacturing, and commercializing vaccines.
Allegations against 1Globe include that the Company failed to disclose or made false or misleading statements related to: (i) the shared beneficial ownership of 20% or more of Sinovac common stock by 1Globe and Li; (ii) the actions of the Company and Li in an effort at Sinovac's 2017 Annual General Meeting to replace four of Sinovac's five incumbent directors; (iii) the agreements and relationships between the Defendants concerning their Sinovac stock; and (iv) the Defendants' plans to purchase additional shares of Sinovac stock.
Since January 2016, competing sets of shareholders have been vying for control of Sinovac. Li was Sinovac's largest shareholder when 1Globe's Chief Executive Officer made an offer in January 2016 to buy Sinovac for approximately $350 million. Li supported a competing group that sought to buy Sinovac for a higher price. Rather than provide this support in an open and transparent manner, Li and 1Globe used deceptive practices to advance their position. After Sinovac adopted a rights agreement on March 28, 2016, containing a "poison pill" that limited the amount of Sinovac stock that a shareholder could acquire (the "Rights Agreement"), Defendants made many intentionally false and misleading statements and violated their statutory disclosure obligations under Section 13(d) of the Securities Exchange Act of 1934 ("Section 13(d)"), in order to conceal the extent and purpose of Li's and 1Globe's ownership of Sinovac stock.
In addition to misrepresenting the amount of Sinovac stock that Li and 1Globe owned, Defendants misrepresented their secret plan to act in concert with other shareholders to try to take control of the Company. While Sinovac knew that Li and 1Globe were acting in concert based on the Company's private communications with them during the battle for control of the Company, this information was not known to public shareholders.
Plaintiff and the Class are Sinovac shareholders caught in the middle of this battle between Sinovac's management and 1Globe for control of the Company. While Plaintiff and the Class seek to receive fair value if Sinovac is taken private, Defendants' behind-the-scenes scheming impeded this effort. Instead, Defendants have caused Plaintiff and the Class substantial harm by making them lose their ability to collect at least millions of shares they would have otherwise received under the Rights Agreement.
Even the purchase of a single share of Sinovac stock above the Rights Agreement's 15% threshold constitutes a trigger event under the Rights Agreement. Accordingly, all of Li's and 1Globe's purchases of Sinovac stock that they made—or directed to be made on their behalf—after March 28, 2016, triggered Sinovac's poison pill.
Defendants' intentionally false statements and omissions concerning the true nature of Li's and 1Globe's ownership of Sinovac stock delayed the exchange ("Exchange") under the Rights Agreement by several years. If Li had fully disclosed his ownership of Sinovac stock, as he was required to do under Section 13(d), it would have been clear as day that the Rights Agreement was triggered by May 2016, at the latest. While Sinovac knew enough information starting in 2016, primarily based on private correspondence, to determine that 1Globe and Li triggered the Rights Agreement, Defendants hid the full extent of their ownership of Sinovac stock and their agreements in connection with the battle for control of the Company. Defendants, therefore, also tortiously interfered with Sinovac's contractual obligations to its shareholders under the Rights Agreement.
If 1Globe and Li's actions had been disclosed publicly, as they were required to be under Section 13(d), Plaintiff's rights would have been exercisable based on that public disclosure, and an Exchange would have occurred based on that date. By misrepresenting the true nature of their ownership of Sinovac stock, Defendants caused that date to be delayed almost three years, until February 22, 2019, resulting in Plaintiff and the Class losing their rights to acquire additional shares of Sinovac stock for all of their shares that they sold in the interim. While Sinovac should have implemented the Rights Agreement in 2016 based on the information available at the time, 1Globe and Li exacerbated the problem by violating their disclosure obligations under Section 13(d). Moreover, Defendants caused the value of Sinovac stock to be artificially depressed by preventing the public from accounting for the value of Defendants' stake in Sinovac and their efforts to take control of the Company.