The lawsuit, filed in the United States District Court for the Southern District of New York, names Alibaba and CEO Eddie Yongming Wu as defendants. Plaintiffs allege that the company’s annual reports failed to disclose its classification as a Chinese military company under the National Defense Authorization Act for fiscal year 2025. Furthermore, the complaint claims that Alibaba misled investors regarding the security of its artificial intelligence models, specifically following accusations from Anthropic PBC that the company illicitly accessed the Claude model via thousands of fraudulent accounts.

The decline in Alibaba’s market performance was marked by a roughly 45% drop in share price during the class period. The legal action asserts that Alibaba’s risk disclosures were insufficient, particularly regarding the company's exposure to U.S. regulatory restrictions and unauthorized data usage. Shareholders seeking to serve as lead plaintiff in the case must submit their applications by October 5, 2026. While class members are not required to take immediate action to remain eligible for potential recovery, legal counsel Joseph E. Levi notes that the timeline underscores critical questions regarding when these risks were known internally.