Lufax Holding Ltd. Securities Class Action Filed Over Auditor Concerns and Related-Party Transactions

A securities class action lawsuit has been filed against Lufax Holding Ltd. (NYSE: LU), seeking to represent investors who purchased or 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 raised concerns about potential, undisclosed related-party transactions. The announcement triggered a nearly 14% sell-off in the price of Lufax American Depositary Shares.

Allegations and timeline

Lufax describes itself as a “leading financial services enabler for small business owners in China.” The company has repeatedly stated that its financial statements were prepared in conformity with applicable accounting rules and that its internal control over financial reporting was effective.

According to the class action complaint, Lufax allegedly 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 PwC.

Lufax said PwC’s disagreement was tied to PwC’s concerns about undisclosed related party transactions that PwC believed warranted an expert and independent investigation. Lufax also stated that, while the Audit Committee engaged forensic accountants and independent investigation counsel, PwC raised questions about the investigation, the independence of the Audit Committee, and the company’s remedial actions.

The company’s disclosure also noted 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.

Market reaction

Following the January 27, 2025 disclosure, the market reacted quickly, with Lufax shares falling by about 14% that day.

Post–class period disclosure

After the class period, 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 these transactions to buy back the underlying assets via the 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.

Firm’s investigation and statements

Hagens Berman said it is investigating whether Lufax intentionally violated applicable accounting rules and disclosure requirements related to related-party transactions.

“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.

Class period and lead plaintiff deadline

• Class Period: Apr. 7, 2023 – Jan. 26, 2025
• Lead Plaintiff Deadline: May 20, 2026

Contact and whistleblower information

The firm urged investors who suffered significant losses to submit their losses and encouraged witnesses with information that could assist the investigation to contact its attorneys.

It also noted that persons with non-public information regarding Lufax may consider options to help in the investigation or take advantage of the SEC Whistleblower program, which provides rewards totaling up to 30% of any successful SEC recovery for eligible whistleblowers who provide original information.

For information related to the case and the investigation, the firm listed Reed Kathrein’s contact number as 844-916-0895.

About Hagens Berman

Hagens Berman is a global plaintiffs’ rights complex litigation firm focusing on corporate accountability. The firm said its team has secured more than $2.9 billion in this area of law.