In re: Global Cord Blood Corporation Securities Litigation

Background

This proposed class action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5. The proposed class consists of people and entities that purchased or otherwise acquired Global Cord Blood Corporation shares between June 4, 2019, and May 3, 2022.

The complaint broadly alleges that the defendants engaged in transactions that diluted existing Global Cord shares and attempted to conceal deficiencies in the company’s balance sheet. It also alleges that the share price sharply declined before the company was delisted from the New York Stock Exchange at the direction of the Securities and Exchange Commission. The opinion does not decide whether those allegations are true.

Lead- plaintiff and lead-counsel motions

The Private Securities Litigation Reform Act requires the court to appoint as lead plaintiff the proposed class member it determines is most capable of adequately representing the class. The court considered the applicants’ financial interests and their ability to meet the requirements for class representatives under Rule 23 of the Federal Rules of Civil Procedure. The court also considered whether any class member had submitted evidence that a presumptive lead plaintiff could not fairly and adequately protect the class or faced unique defenses. No such rebuttal submissions were filed.

Alessandro Somansino stated that he bought 69,119 shares during the relevant period at artificially inflated prices and suffered financial losses of $136,792.58. Kevin Lu stated that he bought 61,130 shares and suffered losses of $65,113.92. MW Gestion and Mark Lewko sought appointment as co-lead plaintiffs and stated that, together, they bought 457,056 shares and 340 options contracts, with approximately $123,400 in combined losses.

The court found that Somansino had suffered the largest financial loss and therefore had the largest financial interest in the litigation. It also found that his claims appeared typical of the proposed class and that he could adequately represent it. The court noted that even after combining their losses, MW Gestion and Lewko did not exceed Somansino’s loss, and that courts in the district disfavor otherwise unrelated investors combining claims to seek lead-plaintiff status.

The court separately considered Glancy, Prongay & Murray LLP’s request to serve as lead counsel. It found that the firm was capable of serving in that role because of its experience litigating securities-fraud claims and serving as lead counsel in numerous securities-fraud class actions.

Ruling

Judge Castel granted the motion to appoint Alessandro Somansino as lead plaintiff and Glancy, Prongay & Murray LLP as lead counsel. The court denied Kevin Lu’s motion and denied the joint motion of MW Gestion and Mark Lewko. It directed the clerk to terminate the three motions and amend the caption to “In re: Global Cord Blood Corporation Securities Litigation.”