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Submit Your Information for the VNET Group, Inc. Lawsuit

Lead plaintiff deadline is February 26, 2024.

If you purchased or acquired VNET Group securities between April 8, 2022 and February 15, 2023, please contact Berger Montague using the form below.

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About the Case

In August 2021, VNET’s co-founder, Josh Sheng Chen, and his companies entered into a $50.25 million margin loan facility with Bold Ally (Cayman) Limited (“Bold Ally”), pledging all of his shares in GenTao Capital Limited (“GenTao”) and certain companies as collateral (the “Facility Agreement”). Defendant Sheng Chen, GenTao, and their affiliates beneficially owned approximately 78.52 million VNET shares.

On February 13, 2023, before the market opened, Bold Ally announced it would exercise its rights under the Facility Agreement following a default by GenTao and was entitled to 48,515,634 Class A ordinary shares and 27,757,992 Class B ordinary shares of the Company.

On this news, VNET’s shares fell $0.20, or 3.2% on February 13, 2023, on unusually heavy trading volume. VNET’s share price continued to decline by $1.09, or 17.8%, over the next consecutive trading session to close at $5.02 per share on February 14, 2023.

Then, on February 15, 2023, VNET disclosed that the board of directors had authorized the issuance of up to 555,000 newly created Class D ordinary shares to the Executive Chairman of the Board, and that these shares would be granted a 500-to-1 vote per share power. VNET stated this measure was required in order to “protect the [c]ompany’s interests and continued stability.”

On this news, VNET’s share price fell $0.10, or 2%, to close at $4.92 per share on February 15, 2023, on unusually heavy trading volume.

The complaint alleges that throughout the Class Period, the defendants failed to disclose to investors that: (1) GenTao was experiencing financial difficulties and was at risk of defaulting on the Facility Agreement; (2) as a result, there was a substantial likelihood that Bold Ally would acquire Defendant Sheng Chen’s significant ownership stake in VNET; and (3) to restore Defendant Sheng Chen’s voting interest in VNET, the company would issue newly created shares to Defendant Sheng Chen, diluting investors’ interest.

Investors who purchased or acquired VNET Group securities between April 8, 2022 and February 15, 2023, may no later than February 26, 2024, seek to be appointed as a lead plaintiff representative of the class.