Shareholder rights law firm Robbins Arroyo LLP announces that purchasers of GDS Holdings Limited (NASDAQ: GDS) have filed a class action complaint against the company’s officers and directors for alleged violations of the Securities Exchange Act of 1934 between November 2, 2016 and July 21, 2018. GDS Holdings purports to be a leading developer and operator of high-performance data centers in China.
View this information on the law firm’s Shareholder Rights Blog: https://www.robbinsarroyo.com/gds-holdings-limited/
GDS Accused of Fraudulent Behavior
According to the complaint, the Prospectus GDS filed for its IPO stated that “net revenue and results of operations are largely determined by the degree to which data center space is committed or pre-committed as well as its utilization” and noted improved commitment and utilization rates between 2014 and 2016. Subsequent annual reports touted high utilization rates and 100% commitment rates.
On July 31, 2018, Blue Orca Capital published a report stating that “GDS is borrowing crippling amounts of debt to enrich insiders by acquiring data centers from undisclosed related parties which are not nearly as valuable as the Company claims.” The report described four categories of GDS’s alleged fraudulent practices: (i) misleading the investing public with respect to the occupancy and utilization rates of a key operating center; (ii) paying inflated purchase prices for related party transactions; (iii) suspicious “serial” equity and debt raisings, despite the company’s apparent strong cash position; and (iv) suspect accounts receivable and payable practices.
On this news, GDS’s ADS price fell $13.42 per share, or over 38% to close at $21.83 per share on July 31, 2018.
GDS Shareholders Have Legal Options
If you would like more information about your rights and potential remedies, contact attorney Leonid Kandinov at (800) 350-6003, [email protected], or via the shareholder information form on the firm’s website.
Robbins Arroyo LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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