MEMORANDUM AND ORDER Yoav Gutman (“Plaintiff”), individually and on behalf of all others similar situated, brings suit against Lizhi Inc., Jinnan Lai, Ning Ding, Zelong Li, Xi Chen (together, “Lizhi Defendants”); Richard Arthur, Colleen A. Devries, Cogency Global Inc. (together, “Cogency Defendants”); Citigroup Global Markets Inc., Needham & Company, LLC, Tiger Brokers (NZ) Limited, China Merchants Securities (HK) Co., Limited, Valuable Capital Limited, Prime Number Capital LLC (together, “Underwriter Defendants”); AMTD Global Markets Limited (“AMTD”), Haitong International Securities Company Limited, Tao Huang, and Ye Yuan1 (collectively with the Lizhi Defendants, Cogency Defendants, Underwriter Defendants, and AMTD, “Defendants”), alleging violations of Sections 11 and 15 of the Securities Act 15 U.S.C. §§77k, 77o(a). Defendants move pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the amended complaint in its entirety. BACKGROUND2 Lizhi operates a social audio platform for user-generated content in China. (First Am. Compl. (“FAC”) 13.) On August 6, 2019, Lizhi filed a confidential draft registration statement on Form F-1 with the SEC that in turn provided comments emphasizing the importance of compliance with SEC Regulation S-K, 17 C.F.R. §229.303 (“Item 303″) and SEC Regulation SK, 17 C.F.R §229.105 (“Item 105″). (Id. 87, 97, 99.) Following amendments, the registration statement was declared effective on January 16, 2020 (the “Registration Statement”) (id. 88), and on January 17, 2020, Lizhi filed a prospectus for an initial public offering (“IPO”) on Form 424B4, which incorporated and formed part of the Registration Statement (the “Prospectus” and with the Registration Statement, the “Registration Statement”), (id.) Lizhi sold more than 4.1 million Lizhi American Depository Shares (“ADS”) at $11.00 per ADS, which generated $45 million in gross offering proceeds. (Id. 89.) Plaintiff claims that the Registration Statement was negligently prepared because it omitted facts concerning the COVID-19 pandemic and “Lizhi’s direct and escalating exposure” to it. (Id.
90, 91.) The Registration Statement contained the following warning: We may be subject to social and natural catastrophic events that are beyond our control, such as natural disasters, health epidemics, riots, political and military upheavals and other outbreaks in the country or region where we have our operations or where a portion of our users or podcasts are located. Such events could significantly disrupt our operations and negatively impact our business, financial conditions and development. (Id. 91.) Lizhi did not disclose, however, that the COVID-19 epidemic was “already ravaging China, the home base, principal market, and significant hub for Lizhi, its employees and its customers”; “the complications associated with the COVID-19 epidemic were already negatively affecting Lizhi’s business, as employees and customers contracted the virus, lost employment, or otherwise experienced difficulty in generating, publishing, and monetizing the content critical to Lizhi’s platform”; and “even prior to the IPO, Lizhi employees and customers complained of, and to, Lizhi, which harmed Lizhi’s reputation and financial condition and prospects.” (Id. 92.) The FAC contains a timeline, based on publicly available documents, detailing COVID-19′s escalation, and China’s and the world’s escalating response, up to the IPO. (Id.
