Gaotu investors may receive additional information about the case by clicking the link "Submit Your Information" above. If you are a member of the class described below, you may no later than December 20, 2021 move the Court to serve as lead plaintiff of the class, if you so choose.
A class action lawsuit has been filed on behalf of those who purchased or acquired Gaotu Techedu Inc. f/k/a GSX Techedu Inc. (“Gaotu”) (NYSE: GOTU) American Depository Shares (ADSs) between March 22, 2021 and March 29, 2021, inclusive (the “Class Period”).
Both Goldman Sachs and Morgan Stanley are global financial services institutions that served as the prime brokers for Archegos Capital Management (“Archegos”), a family office investment fund with $10 billion under management and whose assets included ViacomCBS Inc. (“ViacomCBS”) and Gaotu, both of which Archegos had big concentrated positions in. Unbeknownst to investors and regulators, Defendants had simultaneously allowed Archegos to take on billions of dollars of exposure to volatile equities through swaps contracts, dramatically elevating the risk posed by these concentrated positions.
On March 25, 2021, MoffettNathanson published a report questioning ViacomCBS’s value, downgrading the stock to a “sell,” and setting a price target of only $55 per share, compared to the company’s $85 offer. Following that report, ViacomCBS’s stock fell dramatically and closed at $48 per share on Friday, March 26, 2021. Since Archegos had traded ViacomCBS on margin, it was required to maintain a certain amount of collateral to avoid triggering a margin call. On March 27, 2021, it was reported that Archegos failed to cover and, as a result, had to liquidate more than $20 billion of its leveraged equity positions on Friday, March 26, 2021.
Then, on April 6, 2021, CNBC.com reported that “Morgan Stanley sold about $5 billion in shares from Archegos’ doomed bets on U.S. media and Chinese tech names to a small group of hedge funds late Thursday, March 25,” before the MoffettNathanson report reached the public. The article also reported that Goldman Sachs quickly disposed of its shares tied to Archegos. These sales by Defendants were made with confidential, insider information, including that Gaotu was among the few securities Archegos had to liquidate, and allowed Defendants to unlawfully avoid billions of dollars in losses combined.
According to the Complaint, Goldman Sachs and Morgan Stanley sold a large amount of Gaotu shares during the Class Period while in possession of material, non-public information about Archegos and its need to fully liquidate its position in the Company because of margin call pressure. As a result of these sales, Defendants Goldman Sachs and Morgan Stanley avoided billions in losses combined.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453; toll-free at (844) 887-9500; or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.