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Miao v. Fanhua Inc.

FAC Does Not State Securities Fraud Claims Against Chinese Financial Services Provider

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OPINION & ORDER   In this putative class action arising under the federal securities laws, lead plaintiff Long Miao claims that a Chinese financial services provider’s failure to disclose alleged related-party dealings violated federal securities law. In his First Amended Class Action Complaint, Dkt. 27 (“FAC”), Miao claims that Fanhua, Inc. (“Fanhua”), and two of its officers, defendants Chunlin Wang and Peng Ge, made false and misleading statements or omissions regarding Fanhua’s alleged undisclosed dealings with defendant Qiuping Lai — a former president and director of Fanhua who remained a principal shareholder of the company during the Class Period. Miao brings this lawsuit on behalf of all persons (other than defendants) who purchased U.S.-traded securities of Fanhua between April 20, 2018 and January 16, 2019 (the “Class Period”). Miao alleges violations of §§10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the corresponding rule of the Securities and Exchange Commission, 17 C.F.R. §240.10b-5 (“Rule 10b-5″).1 Pending now are defendants’ motions to dismiss the FAC for failure to state a claim under Federal Rules of Civil Procedure 12(b)(6) and 9(b). For the following reasons, the Court grants the motion and dismisses the FAC in its entirety. I. Background2 A. The Parties Fanhua — known before December 2016 as CNinsure, Inc. (“CNinsure”) — is a financial services provider incorporated in the Cayman Islands, with principal executive offices in China. FAC

2, 19. Through its online platforms and offline sales-and-service network, Fanhua offers a variety of property-and-casualty and life insurance products and services. Id.

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