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A securities class action lawsuit has been filed against Lufax Holding Ltd. (NYSE: LU), seeking to represent investors who purchased or otherwise acquired Lufax securities between April 7, 2023 and January 26, 2025.
The case follows Lufax’s January 27, 2025 announcement that it removed its auditor after the auditor expressed concerns about potential, undisclosed related-party transactions. The announcement triggered a nearly 14% sell-off in the price of Lufax American Depositary Shares.
According to the complaint, Lufax had repeatedly assured investors that its financial statements were prepared in conformity with applicable accounting rules and that its internal control over financial reporting was effective.
The complaint alleges that Lufax lacked adequate internal controls and that certain financial results were materially misstated.
Investors began to learn more on January 27, 2025, when Lufax disclosed that its auditor, PwC, was orally notified of its removal on January 16, 2025—less than six months after the company’s Audit Committee reappointed the firm.
Lufax characterized PwC’s disagreement as stemming from PwC’s concerns about undisclosed related-party transactions that PwC said warranted an expert and independent investigation. Lufax also stated that PwC raised questions about the investigation, the independence of the Audit Committee, and the company’s remedial actions.
The filing also highlights that PwC refused to “consent to the incorporation of its prior audit or review opinions in any current or future Company filings.” PwC further stated that, because it could not rely on the company’s representations regarding the 2022 and 2023 financial statements, its audit opinions for those years should no longer be relied upon.
Following the January 27, 2025 disclosure, the market reacted quickly, with Lufax shares falling by about 14% that day.
After the class period ended, on April 23, 2025, Lufax disclosed that it had engaged in a series of transactions as the sole investor in certain trusts from May 2023 to June 2024. The transactions involved the trusts’ purchases of assets from Lufax-affiliated entities.
Lufax said it entered into the transactions to buy back the underlying assets via these trusts. The company also stated that, based on how the transactions were accounted for, its balance sheet showed an overstatement of both assets and liabilities since the second half of 2023.
The lawsuit is being investigated by Hagens Berman, a national shareholders rights firm, which said it is examining whether Lufax violated federal securities laws.
“We’re investigating whether Lufax intentionally violated applicable accounting rules and disclosure requirements when it comes to full transparency about related-party transactions,” said Reed Kathrein, the Hagens Berman partner leading the firm’s investigation.
The firm urged Lufax investors who suffered significant losses to submit their losses and encouraged witnesses with non-public information to contact its attorneys.
Whistleblowers were also encouraged to consider the SEC Whistleblower program, which provides rewards totaling up to 30% of any successful recovery made by the SEC for eligible individuals who provide original information.
Contact: Reed Kathrein, 844-916-0895; LU@hbsslaw.com
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