Pomerantz LLP Appointed Lead Counsel in DouYu International Holdings Limited Securities Litigation

On August 18, 2020, U.S. District Judge Stephen V. Wilson of the Central District of California appointed Pomerantz LLP as Lead Counsel on behalf of Lead Plaintiff Li Yunyan in the In Re DouYu International Holdings Limited Securities Litigation class action (No. 2:20-cv-02747-SVW-MAA). The action concerns allegations that DouYu, in the Offering Documents of its IPO, misrepresented the extent of the contemporaneous risks and growing costs of maintaining its top streamer base, and failed to disclose rampant non-compliance of its product offerings with regulatory requirements, in the Offering Documents of its IPO.

DouYu is purportedly one of the People’s Republic of China’s top two live-streaming video-game platforms.  Operating on personal computer and mobile applications, DouYu enables users to enjoy immersive and interactive games and live streaming of entertainment. 

The Complaint alleges that the Offering Documents used to effectuate DouYu’s IPO were negligently prepared and, as a result, contained untrue statements of material facts or omitted to state other facts necessary to make the statements made therein not misleading. Specific allegations include that the Company’s Offering Documents failed to disclose that, prior to the IPO: (i) risks related to its top streamers had materialized, including that a top streamer was actively misrepresenting herself on DouYu’s platform, and the costs associated with retaining top streamers were swelling; (ii) DouYu did not ensure that all of its products were fully compliant with current regulatory requirements before those products became available online; and (iii) key interactive features of DouYu’s “lucky draw” were non-compliant with current regulatory requirements, requiring DouYu to remove them from operations, which negatively impacted user engagement activity and caused disappointing financial results.

 The Offering Documents were used to sell more than 67.3 million DouYu ADSs to the investing public at $11.50 per share, raising more than $774 million.