Chinese social media company Renren Inc.’s $300 million settlement with a group of investors who accused its co-founders of self-dealing was rejected by a New York state judge, sending its U.S. share price on a plunge of 53%.
In March 2019, Renren shareholders, including Heng Ren Silk Road Investments LLC and Oasis Investments I Master Fund Ltd., accused Renren’s co-founders Joseph Chen and David Chao of engineering complex transactions that transferred most of Renren’s assets.
The lawsuit accused Renren of spinning off its most valuable assets at artificially low prices. That included a large stake in San Francisco-based personal finance startup Social Finance Inc., which went public through a blank-check merger in June.
On October 8, 2021, Renren announced that it had signed a settlement agreement with the plaintiff, for compensation of more than $300 million, exceeding the requested amount. Renren said the court rejected the procedure for setting the record date to determine whether holders of its Class A ordinary shares and American depositary receipts are entitled to settlement proceeds. The judge also said the proposed fees for the plaintiff’s lawyers were too high, Renren said.
Renren, a Chinese SNS website similar to Facebook, is one of the earliest campus-based social networking platforms in China. It was founded in 2005 and listed on the New York Stock Exchange in 2011. Users can communicate with each other, share information, create their own content, play online games and enjoy a series of other services on this platform.