Lufax Faces Securities Lawsuit Over Alleged Misstatements About Internal Controls and Financial Results 

Lufax (LU) told investors its numbers were solid. Strong controls. Reliable profits. But a new lawsuit alleges the truth was very different. 

Lufax Holding Ltd. faces a securities lawsuit alleging that investors were misled about the company’s internal controls and financial results, and that the alleged truth began to emerge after auditor concerns became public in January 2025. The complaint says Lufax ADSs fell on the disclosure and then declined further over the next two trading days, with the class period running from April 7, 2023, through January 26, 2025. 

Investors who bought Lufax securities during the class period may want to review the allegations and their trading records. 

Lufax’s Business and U.S.-Traded ADSs 

According to the complaint, Lufax describes itself as a leading financial services enabler for small business owners in China, with its principal executive offices in Shanghai and its ADS trading on the NYSE under the ticker LU. The complaint also says the company is incorporated in the Cayman Islands and has no offices in the United States. 

The lawsuit centers on the company’s annual financial reporting and internal controls. It focuses on statements made in Lufax’s 2022 and 2023 Annual Reports and on later disclosures tied to an auditor dispute and a re-audit. 

Alleged Control Failures and Misstated Results 

The complaint alleges that Lufax issued misleading statements regarding the effectiveness of its disclosure controls and internal control over financial reporting, and overstated net profit for 2022 and 2023. It alleges that the company lacked adequate internal controls and that certain financial results were materially misstated. 

The case is built around the claim that the company’s public reporting did not accurately reflect its financial condition during the class period. In plain English, the complaint says investors were told the company’s reporting systems were effective when, according to later disclosures pleaded in the complaint, they were not. 

Investors following this case may want to monitor how the complaint’s allegations develop and whether they affected trading losses during the class period. 

What Lufax Told Investors in Its Annual Reports 

The complaint quotes the 2022 Annual Report as saying management, with the participation of the CEO and CFO, concluded that disclosure controls and procedures were effective as of December 31, 2022. It also quotes management as stating that internal control over financial reporting was effective as of that date. 

The same type of statements appears in the 2023 Annual Report, which states that disclosure controls and procedures were effective as of December 31, 2023, and that internal control over financial reporting was effective as of that date. The complaint further notes that signed Sarbanes-Oxley certifications by Yong Suk Cho and David Siu Kam Choy accompanied both annual reports. 

How the Alleged Truth Emerged: Auditor Concerns, Then Restated Results 

The complaint says the alleged truth began to emerge on January 27, 2025, when Lufax filed a Form 6-K announcing it was proposing to remove its auditor. That filing said PricewaterhouseCoopers had significant concerns about Lufax’s financial disclosures, especially the 2022 and 2023 Annual Reports, and that those audit opinions should no longer be relied upon. 

The complaint alleges the market reacted immediately, with Lufax ADSs falling $0.40 per ADS, or 13.8%, to close at $2.49 on January 27, 2025. It says Lufax ADSs then fell a further $0.17 per ADS, or 6.82%, to $2.32 on January 28, 2025, and another $0.06 per ADS, or 2.58%, to $2.26 on January 29, 2025. 

The complaint also says Lufax’s February 17, 2026, Annual Report disclosed that certain line items had been inaccurately recorded, that 2022 total income had been overstated and 2023 total income had been understated, and that the resulting adjustments decreased net profit for both years. 

Why This Matters to Investors 

The complaint’s central allegation is that Lufax’s public reporting overstated profitability and presented internal controls as effective when they allegedly were not. It ties those alleged misstatements to later disclosures that cast doubt on the 2022 and 2023 annual results and to a stock decline in late January 2025. 

For shareholders who bought during the class period, the issue is whether they traded at prices allegedly inflated by those statements. The complaint says the later auditor-related disclosure and subsequent restatement showed that earlier financial disclosures could not be relied upon. 

Legal Claims 

The complaint says the defendants allegedly violated Section 10(b) of the Exchange Act and Rule 10b-5, and that the individual defendants are also alleged to have violated Section 20(a). It claims that the challenged statements were false or misleading because they misrepresented internal controls and failed to disclose that the financial results were materially misstated. 

In investor terms, the lawsuit alleges that the company and its executives told the market one thing about its reporting and profitability while the underlying facts were different. The complaint further alleges that the individual defendants controlled the company’s disclosures and are responsible as controlling persons. 

Investors who purchased Lufax securities during the class period may wish to understand their rights and review whether they were affected by the alleged conduct. 

About Levi & Korsinsky, LLP 

Levi & Korsinsky, LLP is a nationally recognized securities litigation firm representing investors in complex shareholder actions. The firm has extensive expertise and a team of over 70 employees to serve our clients. Attorney advertising. Prior results do not guarantee similar outcomes. 

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