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Paul, Weiss is widely recognized as having one of the nation’s preeminent securities litigation and regulatory practices. For two decades, our lawyers have guided global corporations and financial institutions through a series of “bet-the-company” securities-related crises, consistently reducing or eliminating their most damaging claims and negotiating favorable resolutions.
SDNY Dismisses Securities Claims Against Canaan IPO Underwriters
- Client News
- July 8, 2021
Paul, Weiss won the dismissal of securities fraud claims brought against our clients, underwriters of an IPO by China-based company Canaan Inc., which manufactures computer hardware used for mining Bitcoin. Claims against Canaan, represented by co-defense counsel, were also dismissed.
In their putative securities class action, filed in March 2020 in the District of Oregon and transferred to the Southern District of New York in August, plaintiffs alleged that Canaan’s registration statement failed to disclose certain related party transactions, which were later revealed to the market in a short-seller report, subsequently leading to a drop in Canaan’s stock price. Plaintiffs alleged that Canaan, its officers and directors, and the underwriters of Canaan’s November 2019 IPO were liable under Sections 10(b) and 20(a) of the Securities Exchange Act and Sections 11 and 15 of the Securities Act.
In its decision dismissing all claims, the court held that plaintiffs failed to adequately plead loss causation concerning two of the alleged omissions, because the short-seller report did not discuss the particular subjects plaintiffs alleged were omitted from the registration statement. The court also held that plaintiffs failed to plead that a non-binding agreement that plaintiffs alleged was omitted from the registration statement was material, finding that the agreement would have been immaterial to a reasonable investor.