Case 1:21-cv-00317-LDH-PK Document 1 Filed 01/20/21 Page 1 of 20 PageID #: 1
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`THE ROSEN LAW FIRM, P.A.
`Phillip Kim, Esq. (PK 9384)
`Laurence M. Rosen, Esq. (LR 5733)
`275 Madison Ave., 40th Floor
`New York, New York 10016
`Telephone: (212) 686-1060
`Fax: (212) 202-3827
`Email: pkim@rosenlegal.com
`lrosen@rosenlegal.com
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`
`Counsel for Plaintiff
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`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`
`YOAV GUTMAN, Individually and on behalf
`of all others similarly situated,
`
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`Case No.
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`CLASS ACTION COMPLAINT FOR
`VIOLATION OF THE FEDERAL
`SECURITIES LAWS
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`JURY TRIAL DEMANDED
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`CLASS ACTION
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`Plaintiff,
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`v.
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`LIZHI INC., JINNAN LAI, NING DING,
`ZELONG LI, XI CHEN, TAO HUANG, YE
`YUAN, RICHARD ARTHUR, COLLEEN A.
`DE VRIES, CITIGROUP GLOBAL MARKETS
`INC.,
`HAITONG
`INTERNATIONAL
`SECURITIES COMPANY LIMITED, AMTD
`GLOBAL MARKETS LIMITED, NEEDHAM
`& COMPANY, LLC, TIGER BROKERS (NZ)
`LIMITED,
`CHINA
`MERCHANTS
`SECURITIES
`(HK)
`CO.,
`LIMITED,
`VALUABLE CAPITAL LIMITED, PRIME
`NUMBER CAPITAL LLC, and, COGENCY
`GLOBAL INC.,
`
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`Defendants.
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`
`
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`Plaintiff Yoav Gutman (“Plaintiff”), individually and on behalf of all other persons
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`similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against
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`Defendants (defined below), alleges the following based upon personal knowledge as to Plaintiff
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`and Plaintiff’s own acts, and information and belief as to all other matters, based upon, inter alia,
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`the investigation conducted by and through Plaintiff’s attorneys, which included, among other
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`things, a review of the defendants’ public documents, and announcements made by defendants,
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`United States Securities and Exchange Commission (“SEC”) filings, wire and press releases
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`published by and regarding Lizhi Inc. (“Lizhi” or the “Company”), analysts’ reports and
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`advisories about the Company, and information readily obtainable on the Internet. Plaintiff
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`believes that substantial evidentiary support will exist for the allegations set forth herein after a
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`reasonable opportunity for discovery.
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`NATURE OF THE ACTION
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`1.
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`This is a federal securities class action on behalf of all persons and entities, other
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`than Defendants, who purchased Lizhi American Depositary Shares (“ADSs”) pursuant and/or
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`traceable to the Company’s Registration Statement (defined below) issued in connection with the
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`Company’s January 17, 2020 initial public offering (the “IPO” or the “Offering”), seeking to
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`recover compensable damages caused by Defendants’ violations of the Securities Act of 1933 (the
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`“Securities Act”) (the “Class”).
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`JURISDICTION AND VENUE
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`2.
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`The claims asserted herein arise under and pursuant to Sections 11, 12(a)(2), and
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`15 of the Securities Act (15 U.S.C. §§ 77k, 77l, and 77o).
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`3.
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`This Court has jurisdiction over the subject matter of this action pursuant to 28
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`U.S.C. § 1331, Section 22 of the Securities Act (15 U.S.C. § 77v).
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`4.
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`Venue is proper in this Judicial District pursuant to Section 28 U.S.C. § 1391(b) as
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`the alleged misleading public filings and press releases entered this district.
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`5.
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`In connection with the acts, conduct and other wrongs alleged in this Complaint,
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`Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,
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`including but not limited to, the United States mail, interstate telephone communications and the
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`facilities of the national securities exchange.
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`PARTIES
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`6.
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`Plaintiff, as set forth in the accompanying certification, incorporated by reference
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`herein, purchased Lizhi ADSs at artificially inflated prices pursuant and/or traceable to the
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`Company’s IPO and was damaged thereby.
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`7.
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`Defendant Lizhi operates a social audio platform for user-generated content in
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`China. Lizhi conducted the IPO in New York, and its ADSs are listed on the NASDAQ Stock
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`Exchange under the ticker symbol “LIZI.”
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`8.
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`Defendant Jinnan Lai (“Lai”) a/k/a Marco Lai founded Lizhi and was, at the time
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`of the IPO, Lizhi’s Chief Executive Officer and a Director on Lizhi’s Board of Directors (the
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`“Board”). Defendant Lai reviewed, contributed to, and signed the Registration Statement.
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`9.
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`Defendant Ning Ding (“Ding”), who also founded Lizhi, was Lizhi’s Chief
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`Technology Officer and a Director on Lizhi’s Board at the time of the IPO. Defendant Ding
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`reviewed, contributed to, and signed the Registration Statement.
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`10.
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`Defendant Zelong Li (“Li”) was, at the time of the IPO, a Vice President at Lizhi
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`and a Director on Lizhi’s Board. Defendant Li reviewed, contributed to, and signed the
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`Registration Statement.
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`11.
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`Defendant Xi Chen (“Chen”) a/k/a Catherine Chen was, at the time of the IPO,
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`Lizhi’s Chief Financial Officer and a Director on Lizhi’s Board of Directors. Defendant Chen
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`reviewed, contributed to, and signed the Registration Statement.
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`12.
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`Defendant Tao Huang (“Huang”) served as a Director on Lizhi’s Board
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`immediately preceding Lizhi’s IPO and until the SEC declared Lizhi’s Registration Statement on
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`Form F-1, filed in connection with its IPO, effective. Defendant Huang resigned from the Board
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`after first reviewing, contributing to, and signing the Registration Statement.
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`13.
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`Defendant Ye Yuan (“Yuan”) served as a Director on Lizhi’s Board immediately
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`preceding Lizhi’s IPO and until the SEC declared Lizhi’s Registration Statement on Form F-1,
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`filed in connection with its IPO, effective. Defendant Yuan resigned from the Board after first
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`reviewing, contributing to, and signing the Registration Statement.
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`14.
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`Defendants Lai, Ding, Li, Chen, Huang and Yuan are sometimes referred to herein
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`as the “Director Defendants.”
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`15.
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`Each of the Director Defendants:
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`(a)
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`directly participated in the management of the Company;
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`(b)
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`was directly involved in the day-to-day operations of the Company at the highest
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`levels;
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`(c)
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`was privy to confidential proprietary information concerning the Company and its
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`business and operations;
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`(d)
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`was directly or indirectly involved in drafting, producing, reviewing and/or
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`disseminating the false and misleading statements and information alleged herein;
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`(e)
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`was directly or indirectly involved in the oversight or implementation of the
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`Company’s internal controls;
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`(f)
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`was aware of or recklessly disregarded the fact that the false and misleading
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`statements were being issued concerning the Company; and/or
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`(g)
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`approved or ratified these statements in violation of the federal securities laws.
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`16.
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`Lizhi is liable for the acts of the Director Defendants and its employees under the
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`doctrine of respondeat superior and common law principles of agency because all of the wrongful
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`acts complained of herein were carried out within the scope of their employment.
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`17.
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`Defendant Richard Arthur (“Arthur”) served as Assistant Secretary on behalf of
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`Defendant Cogency Global Inc. (“Cogency Global”), the designated U.S. representative of
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`Defendant Lizhi, and reviewed, contributed to, and signed the Registration Statement.
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`18.
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`Defendant Colleen A. De Vries (“De Vries”) served as Senior Vice President on
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`behalf of Defendant Cogency Global, the designated U.S. Representative of Defendant Lizhi, and
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`reviewed, contributed to, and signed the Registration Statement.
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`19.
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`Defendants Arthur and De Vries, collectively with the Director Defendants, are
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`sometimes referred to herein as the “Individual Defendants.”
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`20.
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`Each of the Individual Defendants participated in the preparation of and signed (or
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`authorized the signing of the Registration Statement (defined below) and/or an amendment thereto,
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`and the issuance of the Registration Statement.
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`21.
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`Defendant Citigroup Global Markets Inc. (“Citigroup”) was an underwriter for the
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`IPO, serving as a financial advisor for and assisting in the preparation and dissemination of the
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`Company’s false and misleading Offering Documents (defined below). Citigroup served as a
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`representative of all the underwriters. Citigroup also participated in conducting and promoting the
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`Offering. Citigroup’s participation in the solicitation of the Offering was motivated by its financial
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`interest. Defendant Citigroup conducts business New York.
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`22.
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`Defendant Haitong International Securities Company Limited (“Haitong”) was an
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`underwriter for the IPO, serving as a financial adviser for and assisting in the preparation and
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`dissemination of the Company’s false and misleading Offering Documents.
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`23.
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`Defendant AMTD Global Markets Limited (“AMTD”) was an underwriter for the
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`IPO, serving as a financial adviser for and assisting in the preparation and dissemination of the
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`Company’s false and misleading Offering Documents.
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`24.
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`Defendant Needham & Company, LLC (“Needham”) was an underwriter for the
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`IPO, serving as a financial adviser for and assisting in the preparation and dissemination of the
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`Company’s false and misleading Offering Documents.
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`25.
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`Defendant Tiger Brokers (NZ) Limited (“Tiger Brokers”) was an underwriter for
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`the IPO, serving as a financial adviser for and assisting in the preparation and dissemination of the
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`Company’s false and misleading Offering Documents.
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`26.
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`Defendant Prime Number Capital LLC (“Prime Number”) was an underwriter for
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`the IPO, serving as a financial adviser for and assisting in the preparation and dissemination of the
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`Company’s false and misleading Offering Documents.
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`27.
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`Defendant Prime China Merchants Securities (HK) Co., Limited (“China
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`Merchants”) was an underwriter for the IPO, serving as a financial adviser for and assisting in the
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`preparation and dissemination of the Company’s false and misleading Offering Documents.
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`28.
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`Defendant Valuable Capital Limited (“Valuable Capital”) was an underwriter for
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`the IPO, serving as a financial adviser for and assisting in the preparation and dissemination of the
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`Company’s false and misleading Offering Documents.
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`29.
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`The Defendants named in ¶¶ 21-28 above are collectively referred to herein as the
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`“Underwriter Defendants.”
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`30.
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`The Underwriter Defendants agreed to purchase and sell Lizhi ADSs to the public
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`as follows:
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`Name
`Citigroup Global Markets Inc.
`Haitong International Securities Company
`Limited
`AMTD Global Markets Limited
`Needham & Company, LLC
`Tiger Brokers (NZ) Limited
`Prime Number Capital LLC
`China Merchants Securities (HK) Co.,
`Limited
`Valuable Capital Limited
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`Number of Shares
`3,590,891
`49,605
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`114
`188,325
`163,154
`97,917
`114
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`9,880
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`31.
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`Pursuant to the Securities Act, the Underwriter Defendants are liable for the false
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`and misleading statements in the Offering Documents. The Underwriter Defendants’ failure to
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`conduct adequate due diligence investigations was a substantial factor leading to the harm
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`complained of herein.
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`32.
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`The Underwriter Defendants are primarily investment banking houses that
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`specialize, inter alia, in underwriting public offerings of securities. As the underwriters of the
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`Offering, the Underwriter Defendants earned lucrative underwriting fees as a result of their
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`participation in the Offering.
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`33.
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`In addition, the Underwriter Defendants met with potential investors and presented
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`highly favorable, but materially incorrect and/or misleading, information about the Company, its
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`business, products, plans, and financial prospects and/or omitted to disclose material information
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`required to be disclosed under the federal securities laws and applicable regulations promulgated
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`thereunder.
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`34.
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`Representatives of the Underwriter Defendants also assisted the Company and
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`Individual Defendants with planning the Offering. They further purported to conduct an adequate
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`and reasonable investigation into the business, operations, products, and plans of the Company, an
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`undertaking known as a “due diligence” investigation. During the course of their “due diligence,”
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`the Underwriter Defendants had continual access to confidential corporate information concerning
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`the Company’s business, financial condition, products, plans, and prospects.
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`35.
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`In addition to having access to internal corporate documents, the Underwriter
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`Defendants and/or their agents, including their counsel, had access to the Company’s lawyers,
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`management, directors, and top executives to determine: (i) the strategy to best accomplish the
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`Offering; (ii) the terms of the Offering, including the price at which the Company’s ADSs would
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`be sold; (iii) the language to be used in the Offering Documents; (iv) what disclosures about the
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`Company would be made in the Offering Documents; and (v) what responses would be made to
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`the SEC in connection with its review of the Offering Documents. As a result of those constant
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`contacts and communications between the Underwriter Defendants’ representatives and the
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`Company’s management and top executives, at a minimum, the Underwriter Defendants should
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`have known of the Company’s undisclosed existing problems and plans and the material
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`misstatements and omissions contained in the Offering Documents, as detailed herein.
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`36.
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`The Underwriter Defendants also demanded and obtained an agreement from Lizhi
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`that the Company would indemnify and hold the Underwriter Defendants harmless from any
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`liability under the federal securities laws.
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`37.
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`Defendant Cogency Global was Lizhi’s authorized U.S. representative for purposes
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`of the IPO. Defendants Arthur and De Vries, both of whom signed the Registration Statement,
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`were employees of Defendant Cogency Global. As a result, Defendant Cogency Global is liable
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`for the securities law violations committed by Defendants Arthur and De Vries in its capacity as
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`employer and as a control person under the Securities Act.
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`38.
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`Lizhi, the Individual Defendants, the Underwriter Defendants, and Cogency Global
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`are referred to herein, collectively, as the “Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`Background
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`39.
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`On August 6, 2019, Lizhi filed with the SEC a confidential draft registration
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`statement on Form F-1, which, incorporating and in combination with related documents on Form
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`F-6, and filed pursuant to Rule 424(b)(4), would be used for the IPO following a series of
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`amendments in response to SEC comments. The SEC provided comments emphasizing the
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`importance of adequately disclosing material trends and risk factors, as required by Items 303 and
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`105.
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`40.
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`Following subsequent amendments, the registration statement was declared
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`effective on January 16, 2020 (the “Registration Statement”). Thereafter, on January 17, 2020,
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`Lizhi filed a prospectus for the IPO on Form 424B4, which incorporated and formed part of the
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`Registration Statement (the “Prospectus” and with the Registration Statement, the “Offering
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`Documents”).
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`41.
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`The Registration Statement was used to sell to the investing public more than 4.1
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`million Lizhi ADSs at $11.00 per ADS. Defendants generated approximately $45 million in gross
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`offering proceeds from their sale of Lizhi’s securities in the IPO.
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`42.
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`The Offering Documents used to effectuate Lizhi’s IPO and secure this enormous
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`sum for Defendants from Plaintiff and the Class were negligently prepared and, as a result,
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`contained untrue statements of material facts or omitted to state other facts necessary to make the
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`statements made therein not misleading. Specifically, the Offering Documents failed to disclose
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`Lizhi’s direct and escalating exposure to the devastating coronavirus epidemic, then already raging
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`in China and engulfing its business, customers, and employees at the time of the IPO.
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`Materially False and Misleading Statements
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`43.
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`The Registration Statement, signed by the Individual Defendants, misrepresented
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`Lizhi’s direct and escalating exposure to the devastating coronavirus epidemic already
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`proliferating through China, which was impacting the Company’s business, customers, and
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`employees at the time of the IPO. For example, the Registration Statement stated as follows:
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`We face risks related to natural disasters, health epidemics and other outbreaks,
`which could significantly disrupt our operations.
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`We may be subject to social and natural catastrophic events that are beyond our
`control, such as natural disasters, health epidemics, riots, political and military
`upheavals and other outbreaks in the country or region where we have our
`operations or where a portion of our users or podcasts are located. Such events
`could significantly disrupt our operations and negatively impact our business,
`financial conditions and development.
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`(Emphasis added.)
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`44.
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`The statements referenced in ¶43 above was materially false and/or misleading
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`because they misrepresented and failed to disclose the following adverse facts pertaining to the
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`Company’s business, operational and financial results, which were known to Defendants or
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`recklessly disregarded by them. Specifically, Defendants made false and/or misleading statements
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`and/or failed to disclose that: (1) at the time of the IPO, the coronavirus was already ravaging
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`China, the home base, principal market, and significant hub for Lizhi, its employees, and its
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`customers; (2) the complications associated with the coronavirus were already negatively affecting
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`Lizhi’s business, as employees and customers contracted the virus, lost employment, or otherwise
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`experienced difficulty in generating, publishing, and monetizing the content critical to Lizhi’s
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`platform; (3) even prior to the IPO, Lizhi employees and customers complained of, and to, Lizhi,
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`which harmed the Company’s reputation and financial condition and prospects; and (4) as a result,
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`Defendants’ public statements were materially false and/or misleading at all relevant times.
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`45.
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`Defendants were required to disclose this material information in the Registration
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`Statement for at least three independent reasons. First, SEC Regulation S-K, 17 C.F.R. §229.303
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`(“Item 303”), required disclosure of any known events or uncertainties that at the time of the IPO
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`had caused, or were reasonably likely to cause, Lizhi’s disclosed financial information not to be
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`indicative of future operating results. At the time of the IPO, the coronavirus epidemic was already
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`ravaging China, and the complications associated with the coronavirus were already negatively
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`affecting Lizhi’s business, as employees and customers contracted the virus, lost employment, or
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`otherwise experienced difficulty in generating, publishing, and monetizing the content critical to
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`Lizhi platform. These undisclosed, materially negative events and trends were likely to (and in fact
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`did) materially and adversely affect Lizhi’s results and prospects and rendered the disclosed results
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`and trends in the Registration Statement misleading and not indicative of Lizhi’s future operating
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`results.
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`46.
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`Second, SEC Regulation S-K, 17 C.F.R. §229.105 (“Item 105”), required, in the
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`“Risk Factor” section of the Registration Statement, a discussion of the most significant factors
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`that make the offering risky or speculative, and that each risk factor adequately describe the risk.
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`Lizhi’s discussions of risk factors did not even mention, much less adequately describe the risk
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`posed by, Lizhi’s exposure to the coronavirus epidemic already ravaging China, the negative
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`impact the coronavirus epidemic was already having on Lizhi’s business, employees, and
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`customers, the other already occurring negative results and trends, and the likely and consequent
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`materially adverse effects on the Company’s future results, share price, and prospects.
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`47.
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`Third, Defendants’ failure to disclose Lizhi’s exposure to the coronavirus epidemic
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`already ravaging China, the negative impact the coronavirus epidemic was already having on
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`Lizhi’s business, employees, and customers, and other already occurring negative results and
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`trends, as well as the likely and consequent materially adverse effects on the Company’s future
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`results, share price, and prospects, rendered false and misleading the Registration Statement’s
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`many references to known risks that, “if” occurring “might” or “could” affect the Company. These
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`“risks” had already materialized at the time of the IPO.
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`48.
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`Nonetheless, Defendants went forward with the IPO with the foregoing
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`misrepresentations and omissions in the Registration Statement. With these misrepresentations and
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`omissions, the IPO was extremely lucrative for Defendants, who raised approximately $45 million
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`in gross proceeds.
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`The Truth Emerges
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`49.
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`On March 12, 2020, Defendants filed a Form 6-K report, admitting that the
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`Company had already been impacted by the COVID-19 pandemic, stating in relevant part:
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`Recently there was a novel coronavirus outbreak in China, known as COVID-19,
`which soon spread throughout China and in certain other countries. The COVID-
`19 outbreak has brought uncertainties and interruptions to China’s macroeconomics
`and may have adverse effects on our operations. The Chinese government has taken
`various measures to constrain the outbreak. This COVID-19 outbreak has caused,
`and may continue to cause, companies in China, including us, to implement
`temporary adjustment of work schemes allowing employees to work from home.
`LIZHI prioritizes the health and safety of its employees, and has taken various
`preventative and quarantine measures across the Company soon after the outbreak.
`As a result of the COVID-19 outbreak, our normal work schedule and results of
`operations may be adversely impacted, and our revenues for this period may be
`difficult to predict. With offline activities in China largely limited since early 2020
`and many communities subject to temporary lockdown, travel restriction or other
`form of quarantine . . . The extent to which COVID-19 impacts our results will
`depend on future developments, which are highly uncertain and cannot be
`predicted, including new information which may emerge concerning the severity
`of COVID-19 and the actions to contain or treat its impact, among others.
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`(Emphasis added.)
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`50.
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`On April 20, 2020, in a Form 20-F annual report filed with the SEC, Defendants
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`further admitted that before the IPO, indeed as early as “late 2019,” the COVID-19 pandemic was
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`already negatively impacting its business. In relevant part, Defendants stated:
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`In late 2019, COVID-19, a novel strain of coronavirus, has spread worldwide.
`The COVID-19 outbreak has brought uncertainties and interruptions to China’s
`macroeconomics and the global economy and may adversely affect our business
`and financial performance in 2020.
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`*
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`*
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`*
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`We face risks related to the outbreak of COVID-19.
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`COVID-19, a novel strain of coronavirus, has spread worldwide. The COVID-19
`outbreak has brought uncertainties and interruptions to China’s macroeconomics
`and the global economy and may have adverse effects on our operations. The
`Chinese government as well as an increasing number of countries in the world have
`taken various measures to constrain the outbreak. This COVID-19 outbreak has
`caused, and may continue to cause, companies in China, including us, to implement
`temporary adjustment of work schemes allowing employees to work from home.
`We prioritize the health and safety of our employees, and have taken various
`preventative and quarantine measures across the Company soon after the outbreak.
`As a result of the COVID-19 outbreak, our normal work schedule and results of
`operations may be adversely impacted, and our revenues for this period may be
`difficult to predict. [. . .] In addition, the disposable income of certain of our users
`may decrease or have decreased as a result of the impact of the COVID-19
`outbreak, which may also adversely affect our performance. The extent to which
`COVID-19 impacts our results will depend on future developments, which are
`highly uncertain and cannot be predicted, including new information which may
`emerge concerning the severity of COVID-19 and the actions to contain or treat its
`impact, among others.
`
`
`*
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`*
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`*
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`[I]f the impact of the COVID-19 and volatility in the financial markets continue,
`our financing activities in future to raise additional capital may be materially and
`adversely affected, which may in turn have an adverse effect on our ability to meet
`our working capital requirement and our liquidity.
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`Any of these factors may result in large and sudden changes in the volume and price
`at which our ADSs will trade. In particular, since the COVID-19 outbreaks,
`concerns over the economic slowdown resulting from the COVID-19 have led to
`a significant decrease in the major indices of the U.S. capital markets and an
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`increase in the market volatility, which have, and may continue to have, adversely
`affected the market price of our ADSs.
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`(Emphasis added.)
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`51.
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`By the commencement of this action, Lizhi shares are trading below $4 per share,
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`a decline of over 63% from the offering price.
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`52.
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`As a result of Defendants’ wrongful acts and omissions, and the precipitous decline
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`in the market value of the Company’s securities, Plaintiff and other Class members have suffered
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`significant losses and damages.
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`PLAINTIFF’S CLASS ACTION ALLEGATIONS
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`53.
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`Plaintiff brings this action as a class action pursuant to Federal Rule of Civil
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`Procedure 23(a) and (b)(3) on behalf of a class consisting of all persons other than Defendants who
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`purchased or otherwise acquired Lizhi ADSs in its IPO or purchased ADSs thereafter in the stock
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`market pursuant and/or traceable to the Company’s Registration Statement issued in connection
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`with the IPO and were damaged thereby. Excluded from the Class are Defendants, the officers and
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`directors of the Company, members of the Individual Defendants’ immediate families, legal
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`representatives, heirs, successors or assigns and any entity in which the officers and directors of
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`the Company have or had a controlling interest.
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`54.
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`The members of the Class are so numerous that joinder of all members is
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`impracticable. There were over 4.1 million shares sold in the IPO. Since the IPO, the Company’s
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`securities have actively traded on NASDAQ. While the exact number of Class members is
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`unknown to Plaintiff at this time and can be ascertained only through appropriate discovery,
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`Plaintiff believes that there are hundreds, if not thousands of members in the proposed Class.
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`Record owners and other members of the Class may be identified from records maintained by
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`Lizhi or its transfer agent and may be notified of the pendency of this action by mail, using the
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`form of notice similar to that customarily used in securities class actions.
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`55.
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`Plaintiff’s claims are typical of the claims of the members of the Class as all
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`members of the Class are similarly affected by Defendants’ wrongful conduct in violation of
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`federal law that is complained of herein.
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`56.
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`Plaintiff will fairly and adequately protect the interests of the members of the Class
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`and has retained counsel competent and experienced in class and securities litigation. Plaintiff has
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`no interests antagonistic to or in conflict with those of the Class.
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`57.
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`The prosecution of separate actions by individual members of the Class would
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`create a risk of inconsistent or varying adjudication with respect to individual members of the
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`Class that would establish incompatible standards of conduct for the party opposing the Class.
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`58.
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`Common questions of law and fact exist as to all members of the Class and
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`predominate over any questions solely affecting individual members of the Class. Among the
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`questions of law and fact common to the Class are:
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`a. Whether the Securities Act was violated by Defendants as alleged herein;
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`b. Whether the Registration Statement were negligently prepared and contained
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`materially misleading statements and/or omitted material information required to
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`be stated therein;
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`c. the extent to which members of the Class have sustained damages and the proper
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`measure of damages
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`d. A class action is superior to all other available methods for the fair and efficient
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`adjudication of this controversy since joinder of all members is impracticable.
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`Furthermore, as the damages suffered by individual Class members may be
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`relatively small, the expense and burden of individual litigation make it impossible
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`for members of the Class to individually redress the wrongs done to them. There
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`will be no difficulty in the management of this action as a class action.
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`59.
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` A class action is superior to all other available methods for the fair and efficient
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`adjudication of this controversy since joinder of all members is impracticable. Furthermore, as the
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`damages suffered by individual Class members may be relatively small, the expense and burden
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`of individual litigation make it impossible for members of the Class to individually redress the
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`wrongs done to them. There will be no difficulty in the management of this action as a class action.
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`FIRST CAUSE OF ACTION
`Violation of Section 11 of The Securities Act
`Against All Defendants
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`60.
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`Plaintiff repeats and incorporates each and every allegation contained above as if
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`fully set forth herein, except any allegation of fraud, recklessness or intentional misconduct.
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`61.
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`This Count is brought pursuant to Section 11 of the Securities Act, 15 U.S.C. §77k,
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`on behalf of the Class, against Defendants.
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`62.
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`The Registration Statement for the IPO was inaccurate and misleading, contained
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`untrue statements of material facts, omitted to state other facts necessary to make the statements
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`made not misleading, and omitted to state material facts required to be stated therein.
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`63.
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`Lizhi is the registrant for the IPO. Defendants named herein were responsible for
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`the contents and dissemination of the Registration Statement.
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`64.
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`As issuer of the shares, Lizhi is strictly liable to Plaintiff and the Class for the
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`misstatements and omissions.
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`65.
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`None of the Defendants named herein made a reasonable investigation or possessed
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`reasonable grounds for the belief that the statements contained in the Registration Statement were
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`true and without omissions of any material facts and were not misleading.
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`66.
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`By reasons of the conduct herein alleged, each Defendant violated, and/or
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`controlled a person who violated Section 11 of the Securities Act.
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`67.
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`Plaintiff acquired shares of Lizhi’s ADSs pursuant and/or traceable to the
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`Registration Statement for the IPO.
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`68.
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`Plaintiff and the Class have sustained damages. The value of Lizhi ADSs has
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`declined substantially subsequent to and due to Defendants’ violations.
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`SECOND CAUSE OF ACTION
`Violation of Section 12(a)(2) of the Securities Act
`Against All Defendants
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`69.
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` Plaintiff repeats and incorporates each and every allegation contained above as if
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`fully set forth herein.
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`70.
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`This Count does not sound in fraud. Any proceeding allegations of fraud, fraudul