The complaint, Wistisen v. Alibaba Group Holding Limited, accuses executives of violating the Securities Exchange Act of 1934 by concealing ties to the Chinese Ministry of Industry and Information Technology. Plaintiffs allege that these undisclosed affiliations led to Alibaba being classified as a Chinese military company under the National Defense Authorization Act, a designation that triggered significant stock volatility.

Further allegations involve the unauthorized use of Anthropic’s Claude AI models. The suit claims Alibaba accessed these systems through thousands of fake accounts to conduct distillation attacks, effectively training its own models through industrial espionage. These revelations, surfacing in June 2026, caused shares to drop nearly 9% across consecutive reporting windows. Hagens Berman partner Reed Kathrein is currently investigating whether leadership intentionally masked these risks to artificially inflate the company’s market valuation.