• Nationally renowned business litigation and trial firm Reid Collins & Tsai LLP leads prosecution of shareholder derivative action against Fang Holdings Limited's directors and controllers.
• Court ruled that shareholder derivative action will proceed against insiders who "used and manipulated the New York financial market."
• Ruling is one of first shareholder derivative suits involving Cayman corporations to survive dismissal since Reid Collins' landmark Renren, Inc. shareholder derivative litigation.

NEW YORK, May 14, 2024 /PRNewswire/ -- National trial firm Reid Collins & Tsai LLP ("Reid Collins") today announces a victory obtained in a shareholder derivative action brought on behalf of Fang Holdings Limited ("Fang" or the "Company"), a leading real estate Internet portal in China that is incorporated in the Cayman Islands. The action seeks nine figure relief against Fang insiders and their affiliated entities for alleged breaches of fiduciary duty and other misconduct in a complex scheme to enrich themselves and act in bad faith against Fang's best interests.

The Hon. Andrew Borrok of the New York Supreme Court denied Defendants' motions to dismiss the action on May 2, 2024, citing Plaintiffs' "well pled amended complaint" which outlined how Fang's foreign insiders "used and manipulated the New York financial market in a multi-step Transaction to loot Fang [] and enrich themselves in breach of their fiduciary duties."

Background

The Defendants in the action include two of Fang's inside Directors – Vincent Tianquan Mo and Richard Jiangong Dai (Mo's nephew and his successor as Chairman of Fang) – and affiliated entities controlled by Mo and/or Dai.

Fang, a Chinese company incorporated in the Cayman Islands, went public in September 2010 with American Depositary Shares listed on the New York Stock Exchange (NYSE). As summarized in the Court's order denying Defendants' motion to dismiss, the "Transaction foisted upon Fang" by Defendants included: (i) a spin-off of a subsidiary (China Index Holdings Limited) ("Spinco") in New York; (ii) causing Fang to purchase Spinco shares "both on the New York Market (which the defendants first artificially inflated and then later artificially deflated)" and from the Defendant Directors' affiliates "at nearly double the then-market prices in New York"; (iii) causing Fang to suffer NYSE delisting to depress value of Spinco shares to buy them on the cheap; and (iv) orchestrating a take private transaction of Spinco in New York. The net result was that "Mo and Dai forced Fang to shell out approximately $130 million to buy a 35.8% minority interest" in China Index Holdings, which Fang "had owned outright (100%) just a few years prior" so that "Mo and Dai could line their pockets...at Fang's expense."

Echoes of "Renren" – Reid Collins has prior success holding foreign individuals and entities accountable in U.S. courts

In denying Defendants' motions to dismiss and finding that New York courts have personal jurisdiction, the court observed that the precedent-setting Renren, Inc. shareholder derivative litigation, in which Reid Collins was lead counsel for the derivative plaintiffs, was "instructive," noting that "[g]iven the similarities between Renren and this case, the facts of Renren bear recitation." As in Renren (in which Reid Collins led the negotiation of a $300 million settlement), Fang involves alleged breaches of fiduciary duties by insiders of companies incorporated in Cayman Islands that are headquartered in China. In both cases, the alleged misconduct flowed through New York and New York's capital markets. Citing the similarities with Renren, the Court concluded that "the same result is required" in Fang and found that Defendants were subject to personal jurisdiction.

The Fang shareholder derivative action follows Reid Collins' prior success in prosecuting the Renren shareholder derivative action in New York state court to prevent abuses of New York capital markets involving companies incorporated in the Cayman Islands and headquartered abroad.

Reid Collins represents shareholder derivative Plaintiffs Oasis Investments II Master Fund Limited and Lorelei NCC Inc.

The case is captioned Oasis Investments II Master Fund Ltd., Lorelei NCC Inc. v. Vincent Tianquan Mo, et al, No. 652607/2023 (N.Y. Sup. Ct.)

About Reid Collins

Reid Collins & Tsai LLP is one of the nation's leading plaintiffs' trial firms, litigating complex business disputes and achieving billions of dollars in settlements and judgments for its clients. Its team is comprised of accomplished trial lawyers who have extensive experience prosecuting financial fraud, corporate wrongdoing, bankruptcy and insolvency related litigation, employment and partnership disputes, professional liability claims, and cross-border disputes. The firm represents fund managers, investor groups, trustees, receivers, liquidators, international banks, companies, governmental entities, and individuals in federal and state courts across the country.

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SOURCE Reid Collins & Tsai LLP