Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 1 of 66
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`
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`In re 360 DigiTech, Inc. Securities Litigation
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`
`No. 1:21-cv-06013-AKH
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`CONSOLIDATED CLASS ACTION
`COMPLAINT FOR VIOLATION OF
`THE FEDERAL SECURITIES
`LAWS
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`JURY TRIAL DEMANDED
`
`CLASS ACTION
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 2 of 66
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`I.
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`NATURE OF THE ACTION ............................................................................................. 2
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`TABLE OF CONTENTS
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`A.
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`B.
`
`C.
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`D.
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`E.
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`F.
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`Introduction ............................................................................................................. 2
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`360 DigiTech’s Consumer Lending Business Model Led it to Collect
`User’s Personal Data ............................................................................................... 4
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`360 DigiTech was Subject to Numerous Chinese Data Privacy Regulations
`Governing the Collection of Customers’ Personal Information ............................. 5
`
`Defendants Misled Investors, Simultaneously Touting 360 DigiTech’s
`Compliance While Actively Violating Chinese Data Privacy Laws ...................... 7
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`The Truth of Defendants’ Over-Collection Begins to Emerge, Causing 360
`DigiTech’s Share Price to Fall, Yet Defendants Continue to Downplay
`Warnings from the Chinese Government ............................................................... 9
`
`The Full Extent of 360 DigiTech’s Violations Comes to Light After the
`Chinese Government Removes its Core App from App Stores ............................ 12
`
`II.
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`JURISDICTION AND VENUE ....................................................................................... 13
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`III.
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`PARTIES .......................................................................................................................... 13
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`A.
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`B.
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`Lead Plaintiff ........................................................................................................ 13
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`Defendants ............................................................................................................ 14
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`1.
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`2.
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`Corporate Defendant - 360 DigiTech ....................................................... 14
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`Individual Defendants ............................................................................... 14
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`IV.
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`SUBSTANTIVE ALLEGATIONS OF FRAUD .............................................................. 16
`
`A.
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`360 DigiTech’s Loan Facilitation Business Hinged on Access to Large
`Amounts of Personal Data .................................................................................... 16
`
`1.
`
`2.
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`360 DigiTech’s Business .......................................................................... 16
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`360 DigiTech Collected Substantial Amounts of Personal Data
`From Customers ........................................................................................ 17
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`360 DigiTech was Required to Comply with Chinese Regulations When
`Collecting and Storing Customer’s Personal Information .................................... 18
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`360 DigiTech Violated Chinese Data Privacy Regulations by Over-
`Collecting Customers’ Personal Information Without Consent ........................... 23
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`B.
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`C.
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 3 of 66
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`D.
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`E.
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`F.
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`G.
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`360 DigiTech Falsely Touted Compliance with Chinese Regulations ................. 24
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`Government Regulators Warn 360 DigiTech of its Non-Compliance.................. 28
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`The Truth Begins to Emerge as Chinese Regulators Reveal 360
`DigiTech’s Violations and Ultimately Remove the 360 Jietiao App from
`App Stores ............................................................................................................. 29
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`The Full Truth is Revealed When the 360 Jietiao App is Pulled from App
`Stores For Over-Collecting Personal Data ............................................................ 31
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`V.
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`DEFENDANTS’ FALSE AND MISLEADING STATEMENTS ................................... 32
`
`A.
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`B.
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`C.
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`D.
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`E.
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`F.
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`April 30, 2020 – Form 20-F .................................................................................. 33
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`May 28, 2020 – 1Q 2020 Earnings Call ............................................................... 34
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`June 2, 2020 – Press Release ................................................................................ 35
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`June 3, 2020 – Press Release ................................................................................ 35
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`November 19, 2020 –3Q 2020 Earnings Call ....................................................... 36
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`April 21, 2021 – Form 20-F .................................................................................. 36
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`VI.
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`FACTS ABOUT THE IMPACT OF DEFENDANTS’ ILLEGAL CONDUCT
`ARE REVEALED ............................................................................................................ 37
`
`A.
`
`B.
`
`Chinese Regulators Warned 360 DigiTech of its Violations on May 10,
`2021, but Defendants Ignored These Warnings and Falsely Reassured
`Investors of the Company’s Compliance .............................................................. 37
`
`The Full Truth was Revealed When Chinese Regulators Removed the 360
`Jietiao App from App Stores................................................................................. 39
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`VII. LOSS CAUSATION ......................................................................................................... 40
`
`A.
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`May 10, 2021 – First Partial Corrective Disclosure/Materialization of the
`Risk ....................................................................................................................... 42
`
`B.
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`July 8, 2021 – Final Corrective Disclosure/Materialization of the Risk............... 43
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`VIII. ADDITIONAL INDICIA OF SCIENTER ....................................................................... 46
`
`A.
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`Data Privacy Regulations and the 360 Jietiao App Were Critical to 360
`DigiTech’s Core Operations, which Supports a Strong Inference of
`Scienter ................................................................................................................. 47
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 4 of 66
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`B.
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`C.
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`Defendants’ Knowledge of the Chinese Government’s Heightened
`Scrutiny on Fintech Companies’ Data Collection Procedures Supports a
`Strong Inference of Scienter ................................................................................. 48
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`Defendants’ Statements Themselves Support a Strong Inference of
`Scienter ................................................................................................................. 50
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`IX.
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`CONTROL PERSON ALLEGATIONS........................................................................... 51
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`X.
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`XI.
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`CLASS ACTION ALLEGATIONS ................................................................................. 53
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`APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD-ON-THE-
`MARKET DOCTRINE .................................................................................................... 55
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`XII. NO SAFE HARBOR ........................................................................................................ 57
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`XIII. CAUSES OF ACTION ..................................................................................................... 58
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`COUNT I Violation of Section 10(b) of the Exchange Act and Rule 10b-5
`Against 360 DigiTech and the Individual Defendants ...................................................... 58
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`COUNT II Violation of Section 20(a) of the Exchange Act Against All Individual
`Defendants ........................................................................................................................ 60
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`PRAYER FOR RELIEF ............................................................................................................... 61
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`JURY DEMAND .......................................................................................................................... 61
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 5 of 66
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`Court-appointed Lead Plaintiff Gad Sorek (“Lead Plaintiff”), individually and on behalf of
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`all persons and entities who or which, during the period from April 30, 2020 through July 8, 2021,
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`inclusive (the “Class Period”), purchased the publicly traded American Depositary Shares
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`(“ADSs”) of 360 DigiTech, Inc. (“360 DigiTech” or the “Company”) and were damaged thereby
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`(the “Class”)1, bring this Consolidated Class Action Complaint for Violation of the Federal
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`Securities Laws against Defendants 360 DigiTech, several of 360 DigiTech’s senior executives—
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`Chief Executive Officer (“CEO”) Haisheng Wu, former Chief Financial Officer (“CFO”) and
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`Chief Strategy Officer (“CSO”) Jiang Wu, current CFO Zuoli “Alex” Xu, and Chairman of the
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`Board of Directors and controlling shareholder Hongyi Zhou (collectively, the “Individual
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`Defendants”).
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`Lead Plaintiff’s claims are brought upon personal knowledge as to his own acts, and upon
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`information and belief as to all other matters, based upon, among other things, a review and
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`analysis of: (1) reports and documents filed by 360 DigiTech with the Securities and Exchange
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`Commission; (2) reports issued by analysts covering or concerning 360 DigiTech and its business;
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`(3) press releases, news articles, transcripts, videos, and other public statements issued by or about
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`360 DigiTech, its business, and the Individual Defendants; (4) an investigation conducted by Lead
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`Plaintiff’s attorneys, including interviews with former 360 DigiTech employees; and (5) other
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`publicly available information concerning 360 DigiTech, its business, and the allegations
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`contained herein. Lead Plaintiff believes that substantial additional evidentiary support exists for
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`the allegations herein and will continue to be revealed after Lead Plaintiff has a reasonable
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`1 Excluded from the Class are: (i) Defendants; (ii) members of the immediate family of any Defendant who is an
`individual; (iii) any person who was an officer or director of 360 DigiTech during the Class Period; (iv) any firm,
`trust, corporation, or other entity in which any Defendant has or had a controlling interest; (v) 360 DigiTech’s
`employee retirement and benefit plan(s) and their participants or beneficiaries, to the extent they made purchases
`through such plan(s); and (vi) the legal representatives, affiliates, heirs, successors-in-interest, or assigns of any such
`excluded person.
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 6 of 66
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`opportunity for discovery.
`
`I.
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`NATURE OF THE ACTION
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`A.
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`1.
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`Introduction
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`This securities fraud class action arises out of 360 DigiTech’s repeated
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`misstatements and omissions to U.S. investors concerning the Company’s compliance with
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`People’s Republic of China’s (“PRC,” or “China,” or “Chinese”) data privacy and Financial-
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`Technology (“Fintech”) regulations governing the collection and use of consumers’ personal
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`information.
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`2.
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`360 DigiTech’s primary business consisted of facilitating consumer loans, i.e.
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`matching borrowers with lending institutions through what the Company described as its “core
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`product,” the 360 Jietiao mobile application (“app”). As part of this process, the Company
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`collected massive amounts of personal data on each of their users. However, strict Chinese data
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`privacy regulations restricted the types of personal information 360 DigiTech was allowed to
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`collect.
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`3.
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`Moreover, those regulations also required the Company to obtain users’ consent
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`before collecting and storing their personal information. Defendants knew the risks associated
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`with non-compliance with these regulations. As the Company explained, “[a]ny non-compliance”
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`with any data privacy regulations would lead to severe sanctions including the “closedown of
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`websites or even criminal liabilities against us.”
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`4.
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`Defendants, however, chose to ignore the regulations and the consequences of
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`violating them and throughout the Class Period over-collected their customers’ personal
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`information without consent. In fact, 360 DigiTech was eventually caught by Chinese regulators
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`for over-collecting user’s personal data without consent. Moreover, on the last day of the Class
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`2
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 7 of 66
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`Period—July 8, 2021—Sohu Business, a major Chinese business publication, reported that “the
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`relevant person in charge [at 360 DigiTech]” admitted that the 360 Jietiao app was pulled from the
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`market by regulators because of Defendants’ “illegal use of personal information.” Nonetheless,
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`throughout the Class Period, Defendants knowingly and falsely assured investors, stating that “we
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`have always adhered to the highest standard in compliance” and “we always obtain users’
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`consent for our use of data.”
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`5.
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`However, as further reported on July 8, 2021 by 21st Century Business Herald,
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`another major Chinese business publication, 360 DigiTech executives attended a meeting on April
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`29, 2021, in which Chinese financial regulators warned them that 360 DigiTech was in violation
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`of Chinese data privacy regulations based on the Company’s over-collection and use of borrowers’
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`personal information (the “April 29 Meeting”).
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`6.
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`Then, on May 10, 2021, Chinese regulators posted a public notice on the internet
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`detailing that 360 DigiTech “collect[ed] personal information unrelated to the services provided
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`[and] collect[ed] and use[d] personal information without the user’s consent.” In addition, the
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`regulators ordered Defendants to bring their data collection practices into compliance within 15
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`days or be subject to regulatory action. Investors reacted swiftly to the revelation of the
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`Company’s data privacy violations causing 360 DigiTech’s stock price to drop nearly 5% on May
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`10, 2021.
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`7.
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`Despite the disclosure, Defendants misleadingly downplayed the Company’s
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`illegal data collection practices. On May 27, 2021—the first time they addressed investors after
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`the 15-day compliance deadline passed—Defendants reassured investors that “[w]e have
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`consistently held our operations to the highest of compliance standards,” giving investors the
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`3
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 8 of 66
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`false impression that 360 DigiTech had already brought the app back into compliance as required
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`by regulators.
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`8.
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`However, investors were stunned on July 8, 2021 when Chinese regulators removed
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`the 360 Jietiao app from app stores, which the Company admitted was the result of its “illegal
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`use of personal information.” Though 360 DigiTech had dozens of competitors, the 360 Jietiao
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`app was the only app removed from app stores for non-compliance with data privacy regulations.
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`As a result of this news, 360 DigiTech’s stock price plummeted 21.48%, harming investors,
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`including members of the proposed Class in this action.
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`B.
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`360 DigiTech’s Consumer Lending Business Model Led it to Collect User’s
`Personal Data
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`9.
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`360 DigiTech is one of the largest consumer lending institutions in China.2 The
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`Company’s primary business consists of matching consumers seeking personal loans with
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`financial institutions willing to lend to consumers. 360 DigiTech generates revenue by charging
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`various fees for its services, including loan facilitation and service fees, whereby the Company
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`receives a fee based on a percentage of the principal of each loan it facilitates for a particular
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`financial institution.
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`10.
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`On December 14, 2018, 360 DigiTech decided to raise capital from U.S. investors
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`when it held an initial public offering through a sponsored ADS program.3 Throughout the Class
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`2 360 DigiTech also operates in partnership with one of the largest internet companies in China, 360 Security
`Technology Inc. (“360 Group”), which develops and distributes a wide array of technology and data-based products
`including antivirus software, a proprietary web browser, and a mobile application store.
`3 An ADS is a U.S. dollar denominated form of equity (i.e. stock) ownership in a non-U.S. company. It represents
`the foreign shares of a company held on deposit by a custodian bank in the company’s home country and carries the
`corporate and economic rights of the foreign shares, subject to the terms specified on the ADS certificate. A sponsored
`ADS is one that has been created and supported by the company that issued the underlying stock.
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`4
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 9 of 66
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`Period, 360 DigiTech ADSs traded in the United States on the NASDAQ stock exchange under
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`the ticker “QFIN.”4
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`11.
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`360 DigiTech offers its lending services primarily through its “core product,” the
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`360 Jietiao app, which it markets under the 360 Jietiao brand. Consumers can download this app
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`on their mobile phones through most app stores, including: the Android market and Apple app
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`store platforms; 360 Group’s own app store; and other major Chinese app stores, including,
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`Tencent app bao, Huawei app market, and Xiaomi app market.
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`12.
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`During the Class Period, 360 DigiTech collected and stored massive amounts of
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`customers’ personal data, which the Company touted as a competitive advantage over its peers.
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`Indeed, according to 360 DigiTech, the Company analyzed “thousands of data points” and over
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`“3000 variables” to create a profile on a potential borrower. As the Company misleadingly
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`explained during the Class Period, “[l]arge volumes of high-quality data is a key factor
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`differentiating online finance platforms. We have gained a considerable competitive advantage
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`with our proprietary data collection, processing, and analyzing capabilities.”
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`C.
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`360 DigiTech was Subject to Numerous Chinese Data Privacy Regulations
`Governing the Collection of Customers’ Personal Information
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`13.
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`Critically, however, 360 DigiTech was required to collect and store customers’
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`personal data in compliance with numerous strict regulations governing the Fintech industry, as
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`well as specific regulations focused on protecting consumers’ data privacy. At bottom, each of
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`the regulations limited the specific types of data the Company could collect and required consent
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`from the consumer for their data to be collected, stored, and analyzed.
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`14.
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`Fintech and data privacy regulations have been in place in China for many years.
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`Indeed, 360 DigiTech acknowledged during the Class Period that laws promulgated as early as
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`4 Bank of New York Mellon serves as acting depository bank for the ADSs.
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`5
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 10 of 66
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`2011 required that “[a]n internet information service provider must expressly inform the users of
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`the method, content and purpose of the collection and processing of such user personal
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`information, and may only collect such information necessary for the provision of its services.”
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`15.
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`However, on January 25, 2019, prior to the beginning of the Class Period, the
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`Chinese government began a “crackdown” on companies that collected personal information
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`through mobile phone apps. This crackdown led to the promulgation of a series of rules and
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`regulations governing the collection of personal information—to all of which 360 DigiTech was
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`subject.
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`16.
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`For example, on November 28, 2019, less than six months before the start of the
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`Class Period, the Chinese government issued a public notice entitled “Definition of Apps’ Illegal
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`and Irregular Collection and Use of Personal Information.” The definition explicitly identified six
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`violations related to the collection and use of personal information by apps, including failure to
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`obtain users’ consent before collecting and using personal information. Over the course of the
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`Class Period, numerous Chinese regulators issued similar regulations that applied to 360
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`DigiTech’s collection of personal data and required the Company to collect only certain
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`information necessary to loan facilitators and obtain user consent.
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`17.
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`On June 2, 2020, 360 DigiTech issued a press release acknowledging that the
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`Chinese data privacy laws governing the collection of personal information applied to the
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`Company, stating: “[s]ince 2019, Chinese authorities have cracked down on illegal collection and
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`misuse of personal information by internet-related companies. As a result, hundreds of app
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`operators have been fined, issued rectification orders, or warned for their lack of privacy
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`protections and failure to explicitly outline the scope of personal information use or excessive data
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`collection in their apps, among other practices.”
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`6
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 11 of 66
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`18. Moreover, in March 2021, four PRC regulatory bodies, the Cyberspace
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`Administration of China, the Ministry of Industry and Information Technology, the Ministry of
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`Public Security, and the State Administration of Market Regulation, jointly issued a notice entitled
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`“Provisions on the scope of Necessary Personal Information for Common Types of Mobile Internet
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`Applications,” which strictly limited the definition of necessary personal data to a users’ name,
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`phone number, certification number and type, the expiration date of their certification, and their
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`bank card number.
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`19.
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`If found to have violated these data privacy regulations, Defendants knew that 360
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`DigiTech faced severe penalties, including criminal sanctions and removal of its app from app
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`stores. For example, during the Class Period, 360 DigiTech acknowledged that “[a]ny non-
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`compliance” with any data privacy regulations would lead to “warnings, fines, investigations,
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`lawsuits, confiscation of illegal gains, revocation of licenses, cancellation of filings, closedown of
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`websites or even criminal liabilities against us[.]” Given that the 360 Jietiao app was the
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`Company’s “core product,” any such removal would invariably lead to a dramatic downturn in
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`360 DigiTech’s ADS share price.
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`D.
`
`Defendants Misled Investors, Simultaneously Touting 360 DigiTech’s
`Compliance While Actively Violating Chinese Data Privacy Laws
`
`20.
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`Though aware of the fact that 360 DigiTech was subject to strict data privacy
`
`regulations, Defendants chose to ignore them. From the beginning of the Class Period, 360
`
`DigiTech over-collected personal information from its customers, violating the very regulations
`
`that governed that data procurement. Specifically, on July 8, 2021, the last day of the Class Period,
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`Sohu Business, a major Chinese business publication, reported that “the relevant person in charge
`
`[at 360 DigiTech]” admitted that the 360 Jietiao app was pulled from the market by regulators
`
`because of Defendants’ “illegal use of personal information.”
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`7
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 12 of 66
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`21.
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`Nonetheless, since the start of the Class Period, Defendants consistently
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`misrepresented that the Company’s data collection practices conformed with all regulations. For
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`example, on April 30, 2020, the first day of the Class Period, 360 DigiTech filed its 2019 Annual
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`Report on SEC Form 20-F (the “2019 Form 20-F”), which falsely touted the Company’s
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`compliance with Chinese data privacy regulations, including the requirement that 360 DigiTech
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`obtain consent before collecting a customer’s personal information, stating: “[w]e are dedicated to
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`privacy protection of our borrowers during our risk management process, and we adopt policies
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`to make sure we always obtain users’ consent for our use of data and enquire from other sources
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`of their information.”
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`22.
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`Defendants continued to make these false assurances regarding the Company’s
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`compliance with Chinese regulations throughout the Class Period. For instance, Defendants
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`confidently assured investors “[i]n terms of compliance, as a leading fintech platform in China,
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`we have always adhered to the highest standard in compliance.”
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`23.
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`Similarly, Defendants touted 360 DigiTech’s compliance and data collection
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`abilities while also acknowledging that these were critical for the Company’s ongoing success and
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`even a competitive advantage, stating that “[a]s a leading Fintech player, we have always ensured
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`that we maintain the highest standard of compliance in line with the latest regulations. This is
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`critical for healthy and sustainable development of our business,” and “[l]arge volumes of high-
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`quality data is a key factor differentiating online finance platforms. We have gained a considerable
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`competitive advantage with our proprietary data collection, processing, and analyzing
`
`capabilities.”
`
`24.
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`Analysts were convinced by Defendants’ assurances about 360 DigiTech’s data
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`privacy compliance and issued strong “Buy” recommendations. For example, on August 5, 2020,
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`8
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 13 of 66
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`an analyst from CMB International Securities issued a report initiating coverage on 360 DigiTech
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`rating the Company to “outperform.” The report explained “360 Finance is our sector top pick,
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`given its comprehensive strength in client base, funding profile, risk management and regulatory
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`compliance.”
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`25.
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`Similarly, on March 16, 2021, Citi issued an analyst report giving the Company a
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`“Buy” rating and explaining “[a]s we see regulatory overhang as largely removed and QFIN as
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`the key beneficiary of the regulatory scrutiny against big tech . . . QFIN’s valuation should
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`continue to rerate and deserves a valuation premium over [its competitors] given its superior risk
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`mgmt [sic] capability.”
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`26.
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`But as discussed above, Defendants’ statements, such as that the Company “always
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`adhered to the highest standard in compliance,” were false and misleading because Defendants
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`knew they were over-collecting consumer data in violation of Chinese data privacy laws.
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`Specifically, contrary to Defendants’ statements, 360 DigiTech over-collected its users’ personal
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`information unrelated to the services provided and without its users’ consent in violation of the
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`Regulations on the Scope of Necessary Personal Information for Common Mobile Internet
`
`Applications and the Definition of Apps’ Illegal and Irregular Collection and Use of Personal
`
`Information, which has been in place in China since November 28, 2019.
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`E.
`
`The Truth of Defendants’ Over-Collection Begins to Emerge, Causing 360
`DigiTech’s Share Price to Fall, Yet Defendants Continue to Downplay
`Warnings from the Chinese Government
`
`27.
`
`Although Defendants’ false and misleading statements regarding 360 DigiTech’s
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`over-collection of customer data continued throughout the Class Period, July 8, 2021, the last day
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`of the Class Period, 21st Century Business Herald, a major Chinese business publication, reported
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`that on April 29, 2021, the Chinese government notified 360 DigiTech that it was in violation of
`
`regulations governing the collection and use of borrowers’ personal information. The regulators
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`9
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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 14 of 66
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`also ordered the Company to bring the 360 Jietiao app into compliance. Defendants, however,
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`downplayed these warnings and continued to conceal the truth about the Company’s over-
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`collection of personal data without consent.
`
`28.
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`Specifically, on April 29, 2021, 360 DigiTech executives attended a meeting with
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`Chinese financial regulators. At the April 29 Meeting, Chinese regulators warned Defendants that
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`360 DigiTech was in violation of regulations governing the collection and use of borrowers’
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`personal information. After the meeting, the regulators issued seven “rectification requirements,”
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`including the mandate that 360 DigiTech “standardize the collection and use of personal
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`information, marketing and publicity activities and format contracts.”
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`29.
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`Then, on May 10, 2021, the Office of the Central Cyberspace Affairs Commission,
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`the Chinese regulatory body responsible for managing internet-related issues, issued a public
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`bulletin containing a list of internet finance apps that were engaged in the illegal collection of
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`personal information (the “May 10 Bulletin”). The 360 Jietiao app—360 DigiTech’s primary
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`revenue generating app—was included on the list.
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`30.
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`Chinese authorities released
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`the May 10 Bulletin after
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`the Cyberspace
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`Administration of China conducted inspections of popular online lending apps. The May 10
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`Bulletin explained the 360 Jietiao app was found to have “[v]iolate[d] the necessary principles and
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`the requirements of Regulations on the Scope of Necessary Personal Information for Common
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`Mobile Internet Applications, collect[ed] personal information unrelated to the services provided
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`[and] collect[ed] and use[d] personal information without the user’s consent.” The May 10
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`Bulletin then ordered 360 DigiTech to bring the 360 Jietiao app into compliance with all applicable
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`Chinese data privacy regulations within 15 days.
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`
`
`10
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`

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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 15 of 66
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`31.
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`On the news that Defendants were over-collecting their users’ personal information
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`without their consent, 360 DigiTech’s stock price dropped nearly 5%. However, in response to
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`this chance to inform investors of the entire truth regarding their over-collection of personal data
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`in violation of Chinese regulations, Defendants downplayed the inevitability of continuing
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`regulatory action, instead falsely reassuring investors that the Chinese government’s scrutiny was
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`a positive for the Company.
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`32.
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`Specifically, when discussing the April 29 Meeting with analysts on the Company’s
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`May 27, 2021 earnings call, Defendant Haisheng Wu misleadingly downplayed the Company’s
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`non-compliance (and the near certainty of ongoing regulatory action) by assuring investors that
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`360 DigiTech was in compliance with regulatory requirements despite knowing the opposite was
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`true:
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`As you may know, we were among the 13 major FinTech internet platforms that
`the regulator invited to meet recently. At the meeting, the regulator acknowledged
`the importance of our role in improving the efficiency of financial service,
`providing service to unmet demand and reducing transaction costs. We believe the
`meeting was a necessary step to apply fair and balanced regulatory supervision to
`market participants and promote the healthy development of the platform economy.
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`Strengthening supervision of the leading players will increase clarity to the
`regulatory direction of the industry, reduce regulatory overhang, and promote a
`healthy and more consolidated market space. Compared to the other fintech
`companies at the meeting, our business models are relatively simple and
`straightforward. We have consistently held our operations to the highest of
`compliance standards. Therefore, we are very confident we can meet any
`regulatory requirements applied to this industry. As the regulatory framework
`becomes more clear, we believe that leading fintech firms like ourselves will
`embrace a historical era of growth.
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`33.
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`By downplaying the importance of the April 29 Meeting and obfuscating its true
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`nature and purpose, Defendants falsely reassured investors that the Company was at that time
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`operating in compliance with all Chinese data privacy regulations. Further, investors were aware
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`that the May 10 Bulletin allowed the Company 15 days to bring the 360 Jietiao app into compliance
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`
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`11
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`

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`Case 1:21-cv-06013-AKH Document 39 Filed 01/14/22 Page 16 of 66
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`before any regulatory action would be taken. By failing to disclose that the Company continued
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`to violate Chinese data privacy regulations at the time of his statement and reassuring the market
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`that “[w]e have consistently held our operations to the highest of compliance standards,”
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`Defendant Haisheng Wu, gave investors the false impression that the Company was currently in
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`compliance with all applicable Chinese data privacy regulations and that there would be no
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`regulatory action as a result.
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`F.
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`The Full Extent of 360 DigiTech’s Violations Comes to Light After the
`Chinese Government Removes its Core App from App Stores
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`34.
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` Just over a month later, on July 8, 2021, as a result of 360 DigiTech’s non-
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`compliance, Chi