NEW YORK : Coupang, the e-commerce company often called the Amazon of South Korea, won the dismissal on Wednesday of a lawsuit claiming it defrauded shareholders during and after its 2021 initial public offering, Wall Street’s largest by a foreign company in 6-1/2 years.
U.S. District Judge Vernon Broderick in Manhattan said shareholders led by several New York City public pension funds failed to show Coupang and its executives intended to defraud them, made materially misleading statements and omissions, and ignored “red flags” that their public statements were false.
Shareholders accused Coupang of concealing unsafe working conditions at its warehouses, manipulating search results and having employees write product reviews to favor its private-label brands, and coercing suppliers to boost prices on rival platforms for products it automatically price-matched.
They said Coupang’s share price fell by more than half within a year of the March 2021 IPO as the truth came out, including multiple investigations by South Korea’s Fair Trade Commission and a fire at a large fulfillment center.
In an 83-page decision, Broderick said many Coupang statements regarding working conditions were too broad or “aspirational” to be misleading, while statements about its relationships with suppliers were inspecific, true to begin with or “puffery.”
Broderick also said shareholders failed to plead “with particularity” the circumstances of Coupang’s alleged price manipulation. He added that the company disclosed that its employees were writing reviews.
The judge also dismissed all claims against the IPO’s underwriters including Goldman Sachs, JPMorgan Chase and Allen & Co. Broderick dismissed the lawsuit with prejudice, meaning it cannot be brought again.
Lawyers for the shareholders, as well as New York City Comptroller Brad Lander, who oversees the pension funds, did not immediately respond to requests for comment. Neither Coupang nor its lawyers immediately responded to similar requests.
Coupang was founded in 2010 by South Korean billionaire Bom Kim, and is now headquartered in Seattle.
With backing from Softbank Group, Coupang raised $4.6 billion in its IPO, the largest by a foreign company on Wall Street since Chinese e-commerce company Alibaba went public in September 2014.
The case is Teachers’ Retirement System of the City of New York et al v Coupang Inc et al, U.S. District Court, Southern District of New York, No. 22-7309.
