Case 1:21-cv-06013 Document 1 Filed 07/13/21 Page 1 of 29
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`Case No.
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`CLASS ACTION COMPLAINT
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`JURY TRIAL DEMANDED
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`PEDRO BALDERAS, Individually and On
`Behalf of All Others Similarly Situated,
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`Plaintiff,
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`v.
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`360 DIGITECH, INC., HAISHENG WU,
`JIANG WU, and ZUOLI XU,
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`Defendants.
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`Plaintiff Pedro Balderas (“Plaintiff”), individually and on behalf of all others similarly
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`situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against Defendants, alleges
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`the following based upon personal knowledge as to Plaintiff and Plaintiff’s own acts, and
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`information and belief as to all other matters, based upon, inter alia, the investigation conducted
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`by and through Plaintiff’s attorneys, which included, among other things, a review of the
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`Defendants’ public documents, conference calls and announcements made by Defendants, United
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`States (“U.S.”) Securities and Exchange Commission (“SEC”) filings, wire and press releases
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`published by and regarding 360 DigiTech, Inc. (“360 DigiTech” or the “Company”), analysts’
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`reports and advisories about the Company, and information readily obtainable on the Internet.
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`Plaintiff believes that substantial additional evidentiary support will exist for the allegations set
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`forth herein after a 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 a class consisting of all persons
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`and entities other than Defendants that purchased or otherwise acquired 360 DigiTech securities
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`between April 30, 2020 and July 7, 2021, both dates inclusive (the “Class Period”), seeking to
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`recover damages caused by Defendants’ violations of the federal securities laws and to pursue
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`remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange
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`Act”) and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
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`2.
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`360 DigiTech, through its subsidiaries, operates a digital consumer finance
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`platform under the 360 Jietiao brand in the People’s Republic of China (“PRC”). Its platform
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`provides online consumer finance products to the borrowers funded by institutional funding
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`partners. The Company also provides incremental credit assessment, collection, and other
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`services, as well as guarantee for defaulted loans. The Company was formerly known as 360
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`Finance, Inc. and changed its name to 360 DigiTech, Inc. in September 2020.
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`3.
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`Throughout the Class Period, Defendants made materially false and misleading
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`statements regarding the Company’s business, operations, and compliance policies. Specifically,
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`Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company
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`had been collecting personal information in violation of relevant PRC laws and regulations; (ii)
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`accordingly, 360 DigiTech was exposed to an increased risk of regulatory scrutiny and/or
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`enforcement action; and (iii) as a result, the Company’s public statements were materially false
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`and misleading at all relevant times.
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`4.
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`On July 8, 2021, reports circulated on social media to the effect that the Company’s
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`core product, the 360 IOU app, had been removed from major app stores. The reports came on
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`the heels of the removal of other companies’ apps as Chinese regulators investigated their customer
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`data protection practices.
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`5.
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`On this news, 360 DigiTech’s stock price fell $7.12 per share, or 21.48%, to close
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`at $26.02 per share on July 8, 2021.
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`6.
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`Then, on July 9, 2021, Seeking Alpha reported that 360 DigiTech confirmed the
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`removal of its 360 IOU app from the Android app store and quoted a Company spokesperson, who
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`disclosed that the Company had “submitted a new rectification plan and stepped up the whole
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`process.”
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`7.
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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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`JURISDICTION AND VENUE
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`8.
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`The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of
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`the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the
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`SEC (17 C.F.R. § 240.10b-5).
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`9.
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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 and Section 27 of the Exchange Act.
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`10.
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`Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act
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`(15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b), as the alleged misstatements entered and the
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`subsequent damages took place in this Judicial District. Pursuant to 360 DigiTech’s most recent
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`Annual Report, as of December 31, 2020, there were 304,453,780 of the Company’s ordinary
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`shares outstanding. 360 DigiTech’s securities trade on the Nasdaq Global Select market
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`(“NASDAQ”). Accordingly, there are presumably hundreds, if not thousands, of investors in 360
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`DigiTech’s securities located within the U.S., some of whom undoubtedly reside in this Judicial
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`District.
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`11.
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`In connection with the acts alleged in this complaint, Defendants, directly or
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`indirectly, used the means and instrumentalities of interstate commerce, including, but not limited
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`to, the mails, interstate telephone communications, and the facilities of the national securities
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`markets.
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`PARTIES
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`12.
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`Plaintiff, as set forth in the attached Certification, acquired 360 DigiTech securities
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`at artificially inflated prices during the Class Period and was damaged upon the revelation of the
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`alleged corrective disclosures.
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`13.
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`Defendant 360 DigiTech is a Cayman Islands corporation with principal executive
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`offices located at 7/F Lujiazui Finance Plaza, No. 1217, Dongfang Road, Pudong New Area,
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`Shanghai 200122, PRC. The Company’s common shares trade in an efficient market on the
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`NASDAQ under the ticker symbol “QFIN”.
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`14.
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`Defendant Haisheng Wu (“H. Wu”) has served as 360 DigiTech’s Chief Executive
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`Officer and as a Director at all relevant times.
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`15.
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`Defendant Jiang Wu (“J. Wu”) served as 360 DigiTech’s Chief Financial Officer
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`from prior to the start of the Class Period until September 2020, and has served as 360 DigiTech’s
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`Chief Strategy Officer since September 2020.
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`16.
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`Defendant Zuoli Xu (“Xu”) has served as 360 DigiTech’s Chief Financial Officer
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`since September 2020.
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`17.
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`Defendants H. Wu, J. Wu, and Xu are sometimes referred to herein as the
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`“Individual Defendants.”
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`18.
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`The Individual Defendants possessed the power and authority to control the
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`contents of 360 DigiTech’s SEC filings, press releases, and other market communications. The
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`Individual Defendants were provided with copies of 360 DigiTech’s SEC filings and press releases
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`alleged herein to be misleading prior to or shortly after their issuance and had the ability and
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`opportunity to prevent their issuance or to cause them to be corrected. Because of their positions
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`with 360 DigiTech, and their access to material information available to them but not to the public,
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`the Individual Defendants knew that the adverse facts specified herein had not been disclosed to
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`and were being concealed from the public, and that the positive representations being made were
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`then materially false and misleading. The Individual Defendants are liable for the false statements
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`and omissions pleaded herein.
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`19.
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`360 DigiTech and the Individual Defendants are collectively referred to herein as
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`“Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`Background
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`20.
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`360 DigiTech, through its subsidiaries, operates a digital consumer finance
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`platform under the 360 Jietiao brand in the PRC. Its platform provides online consumer finance
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`products to the borrowers funded by institutional funding partners. The Company also provides
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`incremental credit assessment, collection, and other services, as well as guarantee for defaulted
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`loans. The Company was formerly known as 360 Finance, Inc. and changed its name to 360
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`DigiTech, Inc. in September 2020.
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`Materially False and Misleading Statements Issued During the Class Period
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`21.
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`The Class Period begins on April 30, 2020, when 360 DigiTech filed an Annual
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`Report on Form 20-F with the SEC, reporting the Company’s financial and operating results for
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`the year ended December 31, 2019 (the “2019 20-F”). The 2019 20-F stated, in relevant part:
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`Privacy protection
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`We are dedicated to privacy protection of our borrowers during our risk
`management process, and we adopt policies to make sure we always obtain users’
`consent for our use of data and enquire from other sources of their information. We
`also obtain consent from our borrowers to use the data collected by 360 Group for
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`risk management purposes at the registration stage. All 360 Group’s data we relied
`on for risk management purposes is provided on a machine-readable-only basis,
`without subject to any human review or intervention. We can only access the output
`of such credit analysis to eliminate the possibility of data leakage or unnecessary
`privacy invasion as much as possible. We also rely on our technologies and internal
`policies to prevent our systems from being infiltrated or exploited maliciously for
`data theft purpose.
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`Furthermore, in line with our commitment to protection of borrowers’
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`privacy, we do not leverage 360 Group’s rich and proprietary user data by gaining
`direct access to such user data. Instead, we offer 360 Group our artificial
`intelligence and other advanced data tools to enable it to develop algorithms that
`can translate complex user data into insights relating to a user’s financial status and
`creditworthiness. In return, 360 Group provides us with access to such insights by
`allowing us to conduct query searches for credit analysis and risk management
`purposes. In this way, we capitalize on 360 Group’s valuable user data set but avoid
`unnecessary privacy invasion.
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`22.
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`Further, in discussing the relevant PRC information security and privacy protection
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`laws, the 2019 20-F stated, in relevant part:
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`In providing our online consumer finance service, we collect certain
`personal information from our consumers, and also need to share the information
`with our institutional funding partners for the purpose of facilitating credit to our
`consumers, as borrowers. We have obtained consent from borrowers for us to
`collect, use and share their personal information, and have also established
`information security systems to protect the user information and to abide by other
`network security requirements under such laws and regulations. However, there is
`uncertainty as to the interpretation and application of such laws which may be
`interpreted and applied in a manner inconsistent with our current policies and
`practices or require changes to the features of our system. Any non-compliance or
`perceived non-compliance with these laws, regulations or policies may lead to
`warnings, fines, investigations, lawsuits, confiscation of illegal gains, revocation of
`licenses, cancellation of filings, closedown of websites or even criminal liabilities
`against us by government agencies or other individuals.
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`This statement was plainly a catch-call provision not sufficiently tailored to meet the known and/or
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`foreseeable risks facing the Company.
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`23.
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`In addition, in discussing the Company’s “board practices,” the 2019 20-F stated,
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`in relevant part:
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`Audit Committee. Our audit committee consists of Yongjin Fu, Gang Xiao
`and Andrew Y Yan. Yongjin Fu is the chairman of our audit committee. We have
`determined that Gang Xiao, Yongjin Fu and Andrew Y Yan satisfy the
`“independence” requirements of Rule 5605(c)(2) of the Nasdaq Stock Market Rules
`and Rule 10A-3 under the Exchange Act. We have determined that Yongjin Fu
`qualifies as an “audit committee financial expert.” The audit committee oversees
`our accounting and financial reporting processes and the audits of the financial
`statements of our company. The audit committee is responsible for, among other
`things:
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`• monitoring compliance with our code of business conduct and ethics,
`including reviewing the adequacy and effectiveness of our procedures to
`ensure proper compliance.
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`Nominating and Corporate Governance Committee. Our nominating and
`corporate governance committee consists of Hongyi Zhou, Andrew Y Yan and Wei
`Liu. Hongyi Zhou is the chairperson of our nominating and corporate governance
`committee. Andrew Y Yan satisfies the “independence” requirements of Rule
`5605(a)(2) of the Nasdaq Stock Market Rules. The nominating and corporate
`governance committee assists the board of directors in selecting individuals
`qualified to become our directors and in determining the composition of the board
`and its committees. The nominating and corporate governance committee is
`responsible for, among other things:
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`• advising the board periodically with regards to significant developments in
`the law and practice of corporate governance as well as our compliance with
`applicable laws and regulations, and making recommendations to the board
`on all matters of corporate governance and on any remedial action to be
`taken.
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`Appended to the 2019 20-F as exhibits were signed certifications pursuant to the
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`24.
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`Sarbanes-Oxley Act of 2002 (“SOX”) by Defendants H. Wu and J. Wu, attesting that “[t]he
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`information contained in the [2019 20-F] fairly presents, in all material respects, the financial
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`condition and results of operations of the Company.”
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`25.
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`On May 28, 2020, 360 DigiTech issued a press release announcing the Company’s
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`Q1 2020 unaudited financial results. The press release stated, in relevant part:
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`Mr. Haisheng Wu, Chief Executive Officer and Director of 360 Finance,
`commented, “The first quarter of 2020 was an unusual quarter, as the entire fintech
`industry essentially went through a COVID-19-induced extreme stress test in terms
`of business performance and asset quality. Our results for the quarter demonstrate
`that we successfully passed this test with flying colors, while maintaining high
`standards in compliance and a prudent risk management strategy. We attribute this
`success to our high-quality borrower base and the cautious operation approach.
`Furthermore, we attained remarkable progress in every aspect of our business
`operation despite challenging market conditions. Loan origination volume reached
`RMB51.8 billion during the quarter, a 25.6% year-over-year increase. Despite the
`unfavorable market conditions in the first quarter, we endeavored to sustain a
`considerable loan origination volume with decent risk profile compared to last
`quarter in 2019. During the quarter, the total revenue reached RMB3.18 billion.
`Free cash flow increased substantially as well which will provide additional cushion
`for risk management and further uphold our strong risk resilience.”
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`“As the pandemic subsides in China, we have seen D1 delinquency and collection
`rate improved to normal level. Up to present, D1 delinquency rate*9 fell to the level
`which is roughly the same as 6.77% in the fourth quarter of 2019, compared to
`roughly 7.28% in the first quarter of 2020. M1 collection rate*10 is gaining
`momentum and improved to above 86.0% to date. At the same time, asset quality
`proved resilient having effectively withstood the pandemic challenges. The
`consumer finance ecosystem empowered by our technology platform started to
`take shape and has played a pivotal role in improving customer retention rate,
`optimizing risk models and strengthening the collection of customer behavior
`data with adequate customer authorization.”
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`(Emphasis added.)
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`***
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`26.
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`That same day, 360 DigiTech hosted an earnings call with investors and analysts to
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`discuss the Company’s Q1 2020 results (the “Q1 2020 Earnings Call”). During the scripted portion
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`of the Q1 2020 Earnings Call, Defendant H. Wu stated, in relevant part:
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`In terms of compliance, as a leading fintech platform in China, we have always
`adhered to the highest standard in compliance. Together with BAT, JD, Lufax and
`other platforms, we were among the first batch of companies to receive approval to
`file our mobile finance app with the National Internet Finance Association of China.
`Among those on the list, for the mobile app, we were one of the few platforms that
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`is neither a financial institution nor a payment company. Moreover, our 360 Jietiao
`app has received a Level 3 testing certificate from China’s National Computer
`Virus Emergency Response Center, the highest level issued by the institution. In
`particular, our app, received a Level 3 rating for both privacy policy and data
`security.
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`27.
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`On June 2, 2020, 360 DigiTech issued a press release entitled “360 Finance
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`Receives App Security and Information Security Certifications from China’s CVERC.” The press
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`release stated, in relevant part:
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`[360 DigiTech] today announced that its fintech services application, 360 Jietiao,
`has received both the App Security Certification and the App Information Security
`Certification from China’s National Computer Virus Emergency Response Center
`(“CVERC”). Specifically, 360 Jietiao received a level 3 rating for both app privacy
`and data security, the highest level granted by the agency. CVERC is the official
`agency for anti-virus internet security and designated testing body for the “Special
`Crackdown on the Illegal Collection and Misuse of Personal Information by Apps”
`initiative by China’s Ministry of Public Security.
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`360 Finance has placed the upmost importance on protecting user information and
`data since its establishment and is widely recognized for its cyber security
`capabilities which are part of its core DNA. 360 Jietiao incorporates a
`comprehensive security system for user privacy protection leveraging artificial
`intelligence to eliminate non-essential human intervention and enable staff
`authorized access and external supplier management. In addition, 360 Finance set
`up a Privacy Protection and Secure Computing Institute in 2019. The Institute
`conducts research on data privacy protection using cutting-edge technologies
`including federated learning, a machine learning technique that trains an algorithm
`across multiple decentralized edge devices or servers without exchanging local data
`samples.
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`In recent years, personal data security has been increasingly scrutinized by national
`regulatory bodies in China. Since 2019, Chinese authorities have cracked down on
`illegal collection and misuse of personal information by internet-related companies.
`As a result, hundreds of app operators have been fined, issued rectification orders,
`or warned for their lack of privacy protections and failure to explicitly outline the
`scope of personal information use or excessive data collection in their apps, among
`other practices. Given the ongoing regulatory environment, the certifications
`granted to 360 Finance recognize the Company’s core competency in data privacy
`and security technology and further consolidate the Company’s competitive
`advantage in terms of regulatory compliance.
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`Mr. Haisheng Wu, Chief Executive Officer and Director of 360 Finance,
`commented, “We are pleased to receive the certifications for app security and app
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`information security from CVERC. This is a formal acknowledgement from the top
`nationwide certification body of our commitment to maintaining the highest of
`standards for data security and privacy protection when developing apps. Going
`forward, we will continue to invest in privacy protection while leveraging
`cooperation with our external ecosystem partners to collaboratively establish a
`secure and reliable environment for personal data protection.”
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`28.
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`On June 3, 2020, 360 DigiTech issued a press release entitled, “360 Finance Among
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`First Wave of Companies to Register its Financial Services App with China’s NIFA.” The press
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`release stated, in relevant part:
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`[360 DigiTech] today announced that its mobile application “360 Jietiao” was
`among the first batch of financial services apps from 33 companies to complete
`registration and file records with the National Internet Finance Association of China
`(“NIFA”), the national self-regulatory body for China’s internet finance industry
`backed by People’s Bank of China (PBOC).
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`360 Finance was one of the first companies to submit registration documents and
`receive a “FinTech Product Certification”, a key credential needed for app
`registrations launched by the PBOC, as Chinese regulators tighten scrutiny of
`mobile apps operated by financial institutions amid growing public concern over
`personal data collection.
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`As a financial services app with an extensive user base, 360 Jietiao capitalizes on
`the expertise gained through Qihoo 360’s decades of technology development in
`the internet security sector. 360 Finance has established a strict code of conduct
`within its privacy policy to protect systems against data theft. The Company has
`adopted an AI-driven protocol that effectively safeguards personal information
`from any human intervention.
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`Mr. Haisheng Wu, Chief Executive Officer and Director of 360 Finance,
`commented, “Regulators are cracking down in order to further protect consumers
`and have put in place a series of rules to strengthen personal data protection. As a
`company with strong cyber security capabilities in our DNA, 360 Finance places a
`high priority on providing robust data privacy protections and will never collect
`data without users’ consent. We have a strict code of conduct that guides our
`business operations and employee behaviors and we have a technology-driven
`infrastructure in place that secures our systems. We will spare no effort in
`safeguarding personal information.”
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`PBOC issued the notice on the promulgation of financial industry standards and the
`enhancement of mobile app security in September 2019, and designated NIFA to
`carry out the registration process. NIFA has required traditional financial
`institutions and fintech companies to submit self-inspection reports on their
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`financial services apps and approved a list of apps which are in full compliance
`with the law. Industrial and Commercial Bank of China, China Construction Bank
`and Ant Financial are also among the first companies to complete the registration
`and receive a certification.
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`29.
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`On August 23, 2020, 360 DigiTech issued a press release announcing the
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`Company’s Q2 2020 unaudited financial results. The press release stated, in relevant part:
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`On the regulation front, the official release of the “Interim Measures for
`Administration of Internet Loans Issued by Commercial Banks” by the China
`Banking and Insurance Regulatory Commission in July effectively validated our
`business model and cleared a major overhang to the industry. The recently
`announced “Guidelines on Laws Applicable to Trials of Private Lending Cases” by
`the Supreme People’s Court of China set the new court protected interest rate cap
`for private lending. Although our business is almost entirely dealing with
`institutional lending, we believe this new guideline is consistent with our view that
`the overall interest rate in China will gradually trend lower in the intermediate term
`and our business planning has been largely based on that assumption. We are
`confident that we should be able to make timely adjustment to our operations to
`comply with updating regulatory environment while maintaining strong business
`momentum and pursuing our long-term strategic goals.[]
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`30.
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`On August 24, 2020, 360 DigiTech hosted an earnings call with investors and
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`analysts to discuss the Company’s Q2 2020 results (the “Q2 2020 Earnings Call”). During the
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`scripted portion of the Q2 2020 Earnings Call, Defendant H. Wu stated, in relevant part:
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`We believe we have built a structural advantage over our peers, which enables us
`to successfully navigate through previous market uncertainties, such as the P2P
`crackdown, the regulatory changes, and the pandemic. In each of those cases, we
`further strengthened our leadership position. With macro environment economy
`recovery, we see continued improvement in our operational metrics and we feel
`confident in our future prospects.
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`31.
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`On November 19, 2020, 360 DigiTech issued a press release announcing the
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`Company’s Q3 2020 unaudited financial results. The press release stated, in relevant part:
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`It has been a quite busy period over last few months on the regulation front. In July,
`the official release of the “Interim Measures for Administration of Internet Loans
`Issued by Commercial Banks” by the CBIRC clearly validated our business model
`and provided detailed guidelines for the industry. In August, the Supreme People’s
`Court of China issued “Guidelines on Laws Applicable to Trials of Private Lending
`Cases” setting a series of rules for private lending, including an interest rate cap. In
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`early November, the CBIRC issued a draft version of “Interim Administrative
`Measures for Online Micro-credit Business” aiming to cap leverage ratios in micro
`lending and joint-lending activities. We believe this new set of rules are consistent
`with the regulators’ effort in recent years to deleverage the financial system and
`mitigate potential systematic risk. We have marginal exposure in micro lending and
`joint-lending. Also in November, the CBIRC issued “Notice on Promoting the
`Sustainable Development Capability of Consumer Finance and Auto Finance
`Companies and Improving Quality and Efficiency of Financial Services”, which
`clearly set out specific practices for the cooperation between consumer finance
`companies and loan facilitation platforms. Such regulatory changes appeared
`favoring leading platform with strong risk management and regulatory compliance
`capability. We see opportunities to expand the service scope and depth of our data
`driven technology empowered digital platform to reach our long-term strategic
`goals.[]
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`32.
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`That same day, 360 DigiTech hosted an earnings call with investors and analysts to
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`discuss the Company’s Q3 2020 results (the “Q3 2020 Earnings Call”). During the scripted portion
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`of the Q3 2020 Earnings Call, Defendant H. Wu stated, in relevant part:
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`***
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`It has been a very busy quarter in terms of regulatory change, which would create
`significant challenges for the Fintech industry. Since the beginning of the year when
`COVID-19 hit, we have now successfully navigated through three quarters under
`tremendous market uncertainties and the volatility, with consistent execution and
`steadily improving results. This is a strong testament to the soundness of our
`strategies and the sustainability of our business. In the wake of the pandemic and
`the regulatory challenges, we believe the Fintech industry has become further
`polarized as companies with core competitive edge continue to strive with
`consistent performance across business cycles.
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`As a leading Fintech player, we have always ensured that we maintain the highest
`standard of compliance in line with the latest regulations. This is critical for healthy
`and sustainable development of our business. Since the middle of this year, the
`regulators have rolled out a series of policies and guidance closely associated with
`the development of Fintech industry. Overall, we believe the regulators are
`promoting industry orders for healthy and sustainable development.
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`33.
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`On March 15, 2021, 360 DigiTech issued a press release announcing the
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`Company’s Q4 and full year 2020 unaudited financial results. The press release stated, in relevant
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`part:
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`2020 was marked by intense regulatory activities and we view such changes as long
`term positive to the industry and to our operations. Overall, we believe these new
`rules offer regulatory clarity for the industry and should benefit industry leaders
`with strong risk management capability and solid execution track record. We also
`note that some of the recent regulatory changes set more favorable environment for
`the industry. For example, the Supreme Court’s ruling in late December essentially
`exempted institution lending from the 4xLPR rate cap, which lifted a major
`overhang to the industry. We intend to seize the opportunities to continue
`expanding the service scope and depth of our data driven technology empowered
`digital platform to reach our long-term strategic goals.[]
`
`34.
`
`That same day, 360 DigiTech hosted an earnings call with investors and analysts to
`
`discuss the Company’s Q4 2020 results (the “Q4 2020 Earnings Call”). During the scripted portion
`
`of the Q4 2020 Earnings Call, Defendant H. Wu stated, in relevant part:
`
`On the regulatory front, we believe that the regulations brought out recently either
`has minimal impact to our business, or in some cases, even created favorable
`environment for top platforms like us. As you may already know, the new ruling
`from the Supreme People’s Court removed the more restrictive lending rate cap for
`our business. The new guideline on drug lending and micro-lending has a minimal
`impact on our business as our exposure to both is quite marginal. On the other hand,
`China’s antitrust and deleveraging push may squeeze some market share away from
`the industry giants, which will bring us spill over market opportunities.
`
`35.
`
`On April 21, 2021, 360 DigiTech filed an Annual Report on Form 20-F with the
`
`SEC, reporting the Company’s financial and operating results for the year ended December 31,
`
`2020 (the “2020 20-F”). The 2020 20-F stated, in relevant part:
`
`Privacy protection
`
`We are dedicated to privacy protection of our borrowers during our risk
`management process, and we adopt policies to make sure we always obtain users’
`consent for our use of their data and enquires made to other sources of their
`information. We also obtain consent from our borrowers to use the data collected
`by 360 Group for risk management purposes at the registration stage. All 360
`Group’s data we relied on for risk management purposes is provided on a machine-
`readable-only basis, without subject to any human review or intervention. We can
`only access the output of such credit analysis to eliminate the possibility of data
`leakage or unnecessary privacy invasion as much as possible. We also rely on our
`technologies and internal policies to prevent our systems from being infiltrated or
`exploited maliciously for data theft purposes.
`
`
`13
`
`

`

`Case 1:21-cv-06013 Document 1 Filed 07/13/21 Page 14 of 29
`
`
`
`Furthermore, in line with our commitment to protection of borrowers’
`privacy, we do not leverage 360 Group’s rich and proprietary user data by gaining
`direct access to such user data. Instead, we offer 360 Group our artificial
`intelligence and other advanced data tools to enable it to develop algorithms that
`can translate complex user data into insights relating to a user’s financial status and
`creditworthiness. In return, 360 Group provides us with access to such insights by
`allowing us to conduct query searches for credit analysis and risk management
`purposes. In this way, we capitalize on 360 Group’s valuable user data set but avoid
`unnecessary privacy invasion.
`
`
`In June 2020, our fintech service application, 360 Jietiao, received both the
`app security certification and the app information security certification from the
`National Computer Virus Emergency Response Center, or the NCVERC, which is
`the official