Yirendai, one of China's leading online peer-to-peer (P2P) lending companies, is facing several class action lawsuits in the U.S. after its shares tumbled more than 20 percent in response to new regulations announced last week for the industry in China.
U.S. law firm Pomerantz LLP on Tuesday (U.S. time) joined several others to bring class action lawsuits against Yirendai, alleging that the Chinese company made false and/or misleading statements and/or failed to disclose certain information regarding its business operations and new regulations in China, according to a press release from Pomerantz.
In addition to Pomerantz's lawsuit, at least four other U.S. law firms, including Bronstein, Gewirtz & Grossman, LLC and Levi & Korsinsky, LLP, have brought similar cases against Yirendai on behalf of the company's shareholders.
In the lawsuits, the U.S. law firms claimed that Yirendai made false and/or misleading statements and/or failed to disclose that it was experiencing an increasing amount of fraud related to customer applications for its loan products, according to the press releases from the law firms.
They also alleged that Yirendai made false and/or misleading statements and/or failed to disclose that the implementation of new anti-fraud regulations by the Chinese government, in response to increasing fraud in the industry, could have a negative impact on its performance.
The China Banking Regulatory Commission issued a set of regulations for the country's online P2P lending industry on August 24, including bans on them from accepting public deposits, providing guarantees for lenders, or selling financial products.
Following the official announcement, Yirendai shares on the New York Stock Exchange dropped $6.92, or 22 percent, to close at $24.52 per share on August 24, according to the press release from Pomerantz.
Yirendai became the first Chinese online P2P lending company to be listed in the U.S. on December 17, 2015, when the company raised $75 million in an IPO, the Wall Street Journal reported on December 18, 2015.
Efforts by the Global Times to reach Yirendai's office in Beijing were not successful on Wednesday.
Yirendai and other larger P2P companies in China have shrugged off the negative impact of the new regulations, saying they already comply with many of the rules and could actually benefit from them, Reuters reported on August 25.
