Alibaba Group Holding, China’s largest e-commerce services provider, has agreed to pay US$250 million to settle a US lawsuit over the company’s failure to disclose that its executives met with Chinese regulators to discuss counterfeit goods sold on its largest retail platform, several months before the firm went public in 2014. New York-traded Alibaba and its senior executives deny any wrongdoing in the settlement, which “does not constitute an admission or finding that the claims asserted has any merit”, according to the company’s filing to the US Securities and Exchange Commission (SEC) on Monday. Alibaba, based in Hangzhou in eastern China’s Zhejiang province, is the parent company of the South China Morning Post . “We are glad to have this matter behind us,” said an Alibaba spokeswoman on Tuesday. “Prolonged litigation is neither conducive to protecting the interest of our shareholders, nor does it help Alibaba to focus on creating more value for society.” China’s e-commerce players look to smaller cities to help drive consumption, growth Shares of Alibaba were unchanged at US$186.94 at the close of US trading on Monday. The company’s share price has been up about 36 per cent since the start of this year. The class-action lawsuit stemmed from a Chinese regulator’s accusation of widespread fraud and other illegal activities at Alibaba’s Taobao Marketplace, the country’s biggest online shopping platform. A white paper from the State Administration for Industry and Commerce (SAIC) that was published in January 2015 alleged that Taobao Marketplace sold counterfeit goods, as merchants without business licences were allowed to operate and run unauthorised stores. The white paper indicated that Alibaba executives had met with SAIC officials to discuss the platform’s problem with counterfeit goods in July 2014. SAIC also said it had delayed the release of the report to “avoid hindering” Alibaba’s initial public offering (IPO) in the US, which took place on September 2014. Alibaba, Ant Financial to form oversight body to tighten control The complainants in the class-action lawsuit said Alibaba’s failure to disclose the meeting with SAIC was a misrepresentation to investors, as that information could have had a negative effect on the company’s IPO. In Alibaba’s earnings call on January 2015, executive vice-chairman Joseph Tsai had addressed concerns about the SAIC paper to reporters. Tsai said the company had only seen the white paper when it was first posted to the SAIC website. He also said the company’s meetings with regulators were “in the normal course of business”, just like for all international companies. “I want to make it absolutely clear that Alibaba has never requested the SAIC to delay the publication of any report,” Tsai said during the earnings call. Alibaba had also prepared a formal complaint to the SAIC about the unfairness of the white paper, which specifically targeted the company, he said. Here’s how China’s new e-commerce law will affect consumers, platform operators The white paper was removed by the SAIC a day after publication, with the regulator later stating that the document had no legal effect. The proposed class-action settlement is subject to court approval, which is likely to be handed down in October this year, according to Alibaba’s filing. China’s major e-commerce players, including Alibaba, JD.com and Pinduoduo, have long grappled with the problem of fake goods sold on their domestic platforms. Brands have accused Alibaba, for example, of not doing enough to curb counterfeiters. The company was named on the US Trade Representative’s list of “notorious markets” for the large number of infringing goods found on its platform. In recent years, Alibaba has stepped up measures to identify, take down and prevent the listing of fake goods on its platform with the aid of artificial intelligence and data technology. It has also set up the Alibaba Anti-Counterfeiting Alliance, working with brands to combat counterfeiters on its platform. Alibaba posts 37 per cent gain in quarterly profit, bucking slowdown in China The SEC filing has come ahead of Alibaba reporting its financial results for the fourth quarter ended March on May 15. Karen Chan, an equity analyst at Jefferies, wrote in a report on April 17 that Alibaba is expected to post healthy growth its core marketplace business. “We estimate [quarter to March] revenue of 92.6 billion yuan (US$13.7 billion), up 49 per cent year on year, with healthy customer management and commission growth of 28 per cent on the back of [business-to-consumer retail platform] Tmall’s gross merchandise volume growth resilience,” Chan said.