9F ($JFU) Investor Settlement

The parties have reached an agreement to settle the case, but the terms are still being finalized. You can submit your application now, and it will be processed once claims filing opens.

D. New Jersey

Court

2:21-cv-00948

Case number

10/14/2019

Class period Start

09/29/2020

Class period End

9F has reached a tentative settlement to resolve investor claims tied to its arrangement with PICC, allegedly disguised borrower fees, and the later revenue fallout when that arrangement broke down.

Outline:

Before August 2019, 9F’s direct lending business had become a major part of the company, even as Chinese rules tightened around borrower fees. Around April 2019, 9F allegedly used PICC to keep collecting loan-facilitation fees through insurance premiums while telling investors borrowing costs stayed within legal limits. On June 12 and June 24, 2020, 9F disclosed that PICC withheld billions of renminbi, challenged the arrangement, and had collected all of the loan facilitation fees from borrowers. On September 29, 2020, 9F reported a steep revenue drop tied to the PICC dispute, and the matter has now moved to a tentative settlement.

Timeline:
April 2, 2019: A Beijing finance association notice prohibited loan-facilitation institutions from collecting interest or fees from borrowers.
August 14, 2019: 9F’s registration statement became effective for its IPO.
June 12, 2020: 9F disclosed that PICC had withheld RMB 2.2 billion in service fees and filed suit claiming the amended cooperation agreement was invalid.
June 17, 2020: 9F reported that fourth-quarter 2019 loan-facilitation revenue fell sharply because revenue under the direct lending program was not recognized due to the PICC dispute.
June 24, 2020: 9F disclosed that PICC had collected all of the loan-facilitation service fees from borrowers and remitted 9F’s portion to the company.
September 29, 2020: 9F reported that first-half 2020 loan-facilitation revenue had fallen sharply, with the PICC dispute identified as the main reason.
Background:

9F operated an online lending platform in China. A major part of its business came from helping borrowers obtain loans funded by institutional partners, with 9F earning loan-facilitation fees from those transactions.

The problem, according to the case, was that Chinese regulators had tightened restrictions on lending intermediaries before the IPO. Those rules limited total borrowing costs and also prohibited facilitators like 9F from directly collecting fees from borrowers in the way the company had previously done.

Investors say 9F responded by working with PICC. Publicly, that arrangement was presented as insurance protection tied to loans, but the case alleges PICC actually collected loan-facilitation fees from borrowers in the form of insurance premiums and then sent most of that money back to 9F.

The dispute also centers on the size of those charges. Investors claim many borrowers were still paying total borrowing costs above the 36% ceiling, even though 9F told the market it did not have outstanding loans above that level, inclusive of additional fees such as insurance premiums.

The arrangement later unraveled. In June 2020, 9F disclosed that PICC had withheld RMB 2.2 billion in service fees and challenged the agreement, and the company later acknowledged that PICC had collected all of the loan-facilitation service fees from borrowers and remitted 9F’s share. Investors say those disclosures revealed the real risk in 9F’s business model and the revenue damage that followed. The matter has now moved to a tentative settlement, although the available source does not state the amount or the next key dates.

What Can Investors Expect Now?

9F has reached a tentative settlement to resolve investor claims tied to its arrangement with PICC, allegedly disguised borrower fees, and the later revenue fallout when that arrangement broke down.

If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section.

Case Type

US Securities Class Action

Case Status

Tentative Settlement

Alleged Offence

Misleading Statements,

Financial Misrepresentation,

Fraud,

Failure to Disclose

Suspected Party

Directors,

Management

Security Type

Depository Securities (ADS, ADR, GDR)

Trade Direction

Long

Filing date

01/20/2021

Plaintiffs

John S. Wait ; Delanta L. Harrison

Attorneys

Glancy Prongay & Murray LLP

Defendants

Lei Sun ; Yanjun Lin

Trades matching type

FIFO

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