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8h ago

GIC’s U.S. Fraud Suit Against Nio Goes Public, Shares Slide as Company Denies Claims

The case is paused pending related class actions in New York.

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Overview

  • Nio was sued in August in the U.S. Southern District of New York by Singapore’s GIC, which named CEO William Li and former CFO Steven Feng, and the judge has temporarily stayed the case pending overlapping class-action proceedings.
  • GIC alleges Nio unlawfully recognized more than $600 million of leased-battery revenue for FY2021 through affiliated entity Wuhan Weineng, in violation of U.S. GAAP.
  • The complaint cites Weineng’s asset-to-liability ratio of 0.36 at year-end 2021 as evidence that revenue booked from the entity was not probable of collection.
  • GIC says it bought 54.5 million Nio ADRs between Aug. 11, 2020 and July 11, 2022 at artificially inflated prices and seeks compensatory damages.
  • Nio reaffirmed a 2022 independent board review that found the short-seller allegations unsubstantiated, as shares fell as much as 13.8% in Singapore, closed down 9.44% in Hong Kong, and declined in U.S. premarket trading.