The Law Offices of Frank R. Cruz Announces the Filing of a Securities Class Action on Behalf of VNET Group, Inc. (VNET) Investors

The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of persons and entities that purchased or otherwise acquired VNET Group, Inc. (“VNET” or the “Company”) (NASDAQ: VNET) securities between April 8, 2022 and February 15, 2023, inclusive (the “Class Period”). VNET investors have until February 26, 2024 to file a lead plaintiff motion.

If you are a shareholder who suffered a loss, click here to participate.

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 Company’s share price fell $0.20, or 3.2% on February 13, 2023, on unusually heavy trading volume. The Company’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, 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 Company’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 filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that GenTao was experiencing financial difficulties and was at risk of defaulting on the Facility Agreement; (2) that, as a result, there was a substantial likelihood that Bold Ally would acquire Defendant Sheng Chen’s significant ownership stake in VNET; (3) that, to restore Defendant Sheng Chen’s voting interest in VNET, the Company would issue newly created shares to Defendant Sheng Chen, diluting investors’ interest; (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

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If you purchased VNET securities during the Class Period, you may move the Court no later than February 26, 2024 to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you purchased VNET securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 2121 Avenue of the Stars, Suite 800, Los Angeles, California 90067 at 310-914-5007, by email to info@frankcruzlaw.com, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.

This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231228993084/en/

The Law Offices of Frank R. Cruz Announces the Filing of a Securities Class Action on Behalf of VNET Group, Inc. (VNET) Investors