According to the Complaint, X Financial is a financial technology company based in Shenzhen, China, that provides an online lending and borrowing marketplace.

The Complaint alleges that the Company’s Registration Statement was negligently prepared and, as a result, contained untrue statements of material fact or omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation.

Specifically, the Complaint alleges that the Registration Statement made false and/or misleading statements and/or failed to disclose that: (i) the Company’s total loan facilitation amount was not growing, but rather was contracting; (ii) the number of investors actively using X Financial’s platform was shrinking; (iii) demand from SMEs for the Company’s preferred loans was plummeting; (iv) the Company’s preferred loans had performed so poorly that it had begun drastically scaling back its preferred loans in the first quarter of 2018, several months before the IPO, and was in the process of phasing out such loans completely; (v) demand for the Company’s card loans was also plummeting; (vi) the revenue and loan facilitation growth provided in the Registration Statement leading up to the IPO was achieved by relaxed credit and due diligence standards, under which the Company had underwritten tens of millions of dollars’ worth of poor-quality loans that suffered from a disproportionately high risk of default as compared to the Company’s earlier loan vintages; (vii) the Company was suffering from accelerated delinquency rates from poor quality loans that it had underwritten in the first, second, and third quarters of 2018, which had caused the Company’s delinquency rate to sharply rise; (viii) the Company’s product mix had significantly deteriorated; (ix) the Company’s net revenue was on track to decline by 22% during the third quarter of 2018; and (x) as a result, the Registration Statement was materially false and/or misleading and failed to state information required to be stated therein.

On May 13, 2020, the Court issued an Order appointing Lead Plaintiffs and Counsel. Lead Plaintiffs filed an amended Complaint on July 13. On August 31, Plaintiffs voluntarily dismissed one of the counts from the amended Complaint. Defendants filed a Motion to Dismiss the amended Complaint on March 8, 2021. The Court referred the Motion to Dismiss to a Magistrate Judge for a Report and Recommendation ("R&R") on March 9.

On December 9, 2021, the Magistrate Judge issued the R&R, recommending that the Court grant Defendants' Motion to Dismiss in its entirety, with leave to replead two of the claims. The Court adopted the R&R in its entirety on March 13, 2022, dismissing three of the claims with prejudice and two without prejudice. Lead Plaintiffs voluntarily dismissed the action as to all Defendants on April 12.