VNET Group, Inc. (NASDAQ: VNET)

This lawsuit is for anyone who acquired securities in VNET Group, Inc. (NASDAQ: VNET) from April 8, 2022 through February 15, 2023.

The lawsuit alleges that the Company and certain of its executives violated federal law. Specifically, the lawsuit alleges that, throughout the time period mentioned above, the Company misled investors regarding its financial condition. More specifically, the lawsuit alleges that the Company misled investors by failing to inform investors that the Company’s co-founder had pledged as collateral for a personal loan stock in the co-founder’s other companies that the co-founder knew to be insolvent, thus jeopardizing his ownership, and the management, of the Company.

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”). 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 (in the form of 8,085,939 American depositary shares, or “ADSs” or “shares”) and 27,757,992 Class B ordinary shares of the Company. On this news, the price of the Company’s stock dropped precipitously on unusually heavy trading volume. Then, on February 15, 2023, before the market opened, VNET disclosed that the board of directors had approved and 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. The Company stated this measure was required in order to “protect the Company’s interests and continued stability.” On this news, the price of the Company’s stock again dropped precipitously on unusually heavy trading volume.

The Law Offices of Howard G. Smith seeks to recover damages on behalf of class members. If you acquired securities in VNET Group, Inc. (NASDAQ: VNET) from April 8, 2022 through February 15, 2023 you may join the lawsuit by submitting your information online, or you may call the Law Offices of Howard G. Smith and speak to Mr. Smith directly to learn how he can protect your rights.