Lufax (LU) told investors its controls were effective and its financial reporting was accurate. The lawsuit alleges those assurances were false, and that the company later disclosed misstatements affecting its 2022 and 2023 results.
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Investors who purchased or otherwise acquired publicly traded Lufax securities between April 7, 2023, and January 26, 2025, may be members of a proposed class in a federal securities lawsuit alleging the company overstated profits and misrepresented its internal controls. The case centers on a dramatic auditor departure and subsequent restatement that allegedly confirmed years of inaccurate financial reporting.
A complaint filed on March 21, 2026, in the United States District Court for the Central District of California alleges that Lufax Holding Ltd (NYSE: LU) made materially false and misleading statements in its 2022 and 2023 annual reports filed with the Securities and Exchange Commission. The class period runs from April 7, 2023, through January 26, 2025. When the alleged truth began to emerge in late January 2025, Lufax ADS shares fell $0.40, or 13.8%, on January 27, 2025, then fell an additional $0.17, or 6.82%, on January 28, 2025, and a further $0.06, or 2.58%, on January 29, 2025.
Investors who purchased Lufax securities during the class period and suffered losses may wish to learn more about their potential rights in this matter.
Who Is Lufax Holding Ltd
Lufax describes itself as a leading financial services enabler for small business owners in China. The company is incorporated in the Cayman Islands and maintains its principal executive offices in Shanghai, China, with no offices in the United States. Lufax American Depositary Shares trade on the New York Stock Exchange under the ticker symbol “LU.”
What the Lawsuit Alleges
The lawsuit alleges that Lufax repeatedly told investors that its internal controls over financial reporting were effective, when in reality they were deficient. Plaintiff alleges that Lufax overstated its net profit for both 2022 and 2023, and that the company and its senior executives knew or recklessly disregarded that the financial statements contained material inaccuracies. The overarching theme of the case is that investors paid artificially inflated prices for Lufax securities based on financial disclosures that allegedly could not be trusted.
Investors who want to follow developments in this case or learn more about the allegations may wish to monitor future filings in this proceeding.
What Management Told Investors
In the 2022 Annual Report filed April 7, 2023, management stated that it had evaluated Lufax’s disclosure controls and procedures and concluded they were effective as of December 31, 2022. The same report included a management assertion that internal control over financial reporting was effective as of December 31, 2022, based on the Committee of Sponsoring Organizations of the Treadway Commission framework. In the 2023 Annual Report filed April 23, 2024, management made virtually identical representations, again concluding that disclosure controls and internal controls over financial reporting were effective as of December 31, 2023. Both annual reports included certifications by the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002 attesting to the accuracy of financial reporting and the disclosure of all fraud.
How the Alleged Truth Emerged
On January 27, 2025, Lufax filed a Form 6-K with the SEC disclosing that it was removing PricewaterhouseCoopers as its auditor. The filing revealed that PwC and its PCAOB-registered affiliate, PwC ZT, had raised serious concerns about certain possible related party transactions after receiving information from a then-current senior executive of the company in October 2024. PwC ZT stated it could no longer consent to the incorporation of its prior audit or review opinions in any current or future company filings and that neither the company nor any successor auditor could rely on work PwC ZT had performed, as it could no longer rely on representations provided by management in connection with the 2022 and 2023 audits. On February 17, 2026, Lufax filed its 2024 Annual Report, which disclosed that an independent investigation and re-audit found that total income for 2022 had been overstated by approximately RMB493.8 million and that net profit for 2022 and 2023 had been reduced by RMB917.0 million and RMB81.4 million, respectively.
Why This Case May Matter to Shareholders
The complaint alleges that investors who purchased Lufax ADS shares during the class period did so at prices artificially inflated by false statements about the company’s financial performance and the quality of its controls. When PwC ZT stated that its 2022 and 2023 audit opinions should no longer be relied upon, and the company later restated aspects of its financial results, the market price of Lufax shares dropped sharply over three consecutive trading days. Shareholders who held or purchased shares during the class period may have suffered losses directly tied to these alleged disclosures.
The Legal Claims
The complaint asserts claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder against all defendants, alleging they made untrue statements of material fact and employed schemes that operated as a fraud on investors. A second count under Section 20(a) of the Exchange Act is brought against the individual defendants, CEO Yong Suk Cho and former CFO David Siu Kam Choy, as alleged controlling persons who directed and participated in the alleged misconduct. The plaintiff alleges scienter, contending that the individual defendants had actual knowledge of the material omissions and the falsity of the statements, or acted with reckless disregard for the truth.
Investors who purchased Lufax securities during the class period and wish to understand their potential rights should consider consulting with legal counsel.
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