District Court Dismisses Securities Class Action Against Soufun Holdings Limited
On October 18, 2016, Wilson Sonsini Goodrich & Rosati secured a dismissal on behalf of SouFun Holdings Limited, a large Chinese online real estate company, and its two most senior officers in a securities class action in the U.S. District Court for the Central District of California. The plaintiffs primarily alleged that Soufun’s financial results—in particular, a metric called Gross Market Value—were false because they included the value of thousands of "fake" rental contracts. The lawsuit followed a short-seller report that translated China-based media reports regarding Soufun’s firing of hundreds of sales employees for creating fake rental contracts. Although the complaint included eight confidential witnesses who asserted that fake rental contracts were routinely created by sales employees, the court dismissed the complaint and held that the plaintiffs failed to allege facts indicating that the fake transactions caused SouFun’s financials to be materially overstated and failed to allege facts showing scienter. The court gave the plaintiffs 14 days to amend, but the plaintiffs have agreed to dismiss the case without compensation rather than filing an amended complaint.
The WSGR team representing Soufun in the matter included partners Steve Schatz and Rod Strickland; Of Counsel Cheryl Foung; associate Lauren Zweier; and paralegals Shea Savage, Stephanie Van Horn, Isabelle James, and Kazuko Shintani.
For more information, please refer to the court's opinion.