Underwriter Syndicate Wins Dismissal of Securities Class Action Relating to Disclosure of Chinese E-Cigarette Regulations

Paul, Weiss won the dismissal, with prejudice, of a putative class action in the Southern District of New York arising out of the January 2021 IPO of RLX Technology, Inc., a Chinese e-cigarette company. Paul, Weiss represented the underwriters of the IPO, led by Citigroup Global Markets Inc.

The plaintiffs asserted claims under the Securities Act of 1933 and alleged that the defendants made material misstatements and omissions in the IPO offering materials principally by failing to disclose the likelihood of forthcoming enhanced regulations of e-cigarettes in China that would harm RLX’s financial prospects. In a 59-page opinion dismissing the complaint, Judge Engelmayer held that the offering materials, “taken together and in context,” did not misleadingly state or omit facts related to the prospect of more stringent regulation of e-cigarettes in China; the allegedly concealed facts were not material because they were “already in the mix of public information” at the time of the IPO; and the plaintiffs’ claims were foreclosed by the “bespeaks caution” doctrine due to the robust risk disclosures in the offering materials.

The Paul, Weiss team included litigation partner Susanna Buergel and counsel Daniel Sinnreich.