According to the law firm press release, the filed complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company was experiencing an increasing amount of fraud related to customer applications for its loan products; (2) 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 the Company’s performance; and (3) that, as a result of the foregoing, Defendants’ statements about Yirendai’s business, operations, and prospects, were false and misleading and/or lacked a reasonable basis.
On August 24, 2016, Bloomberg reported that China imposed limits on peer-to-peer lending, citing authorities’ concern over defaults and fraud among the nation’s 2,349 online lenders. Specifically, Bloomberg reported that under the new regulations, lenders are barred from taking public deposits or selling wealth-management products, and must appoint qualified banks as custodians and improve information disclosure. Bloomberg also reported that individual borrowing is now limited to 1 million yuan ($150,000) from peer-to-peer websites, including a maximum of 200,000 yuan from any one site.
On this news, Yirendai’s share price fell $6.92 per share, or 22%, to close at $24.52 per share on August 24, 2016, on unusually heavy trading volume.
On November 29, 2016, the Court appointed Lead Plaintiffs and Counsel. Lead Plaintiffs filed an amended complaint on January 27, 2017.
On June 20, 2017, the Court issued an Order granting Defendants' Motion to Dismiss with leave to amend. Plaintiffs did not amend their complaint, and rather the parties stipulated to a dismissal of this case on July 10.