Securities class action against Coupang has ‘no jurisdictional limitations,’ attorney says

While it may be difficult to hold Coupang directly liable for the recent data breach that affected more than 33 million users, the US-listed company can still be held accountable for allegedly failing to disclose the incident to global investors — and no jurisdictional restrictions apply, a case attorney said.

New York-based investor rights law firm The Rosen Law Firm on Thursday filed a class-action lawsuit against Coupang in the US District Court for the Northern District of California on behalf of buyers of the company’s securities.

The complaint argued that when Coupang became aware of the data breach, it did not file a report to the US Securities and Exchange Commission in compliance with applicable reporting rules, leading to an artificially inflated share price.

“There are no jurisdictional limitations for the securities case since it is brought on behalf of those who purchased Coupang stock listed on the New York Stock Exchange,” said Phillip Kim, attorney at The Rosen Law Firm, when asked by The Korea Herald whether there were any jurisdictional limitations on pursuing a securities class action against Coupang in the US court.

Coupang Inc. is a holding company listed and domiciled in the US, but the e-commerce giant’s core operations are based in South Korea, creating jurisdictional complexities over liability.

“So, someone in South Korea or anywhere else in the world who bought Coupang stock can join the US class action,” Kim said, adding that investors are eligible regardless of whether their losses have been realized, and that citizenship and residency do not matter.

Any investor who purchased Coupang shares between Aug. 6 and Dec. 25 and incurred losses — whether realized or unrealized — is eligible to join the class action seeking monetary damages. During that period, Coupang’s market capitalization fell to $42.4 billion from $53.3 billion.

Prior to Coupang disclosing the breach to the public, senior executives sold troves of company stock, raising investor concern despite the trades being officially preplanned.

While Coupang has been facing a series of lawsuits following the security breach, The Rosen Law Firm pursues shareholder class actions challenging stock price declines and investment losses stemming from alleged failures in corporate disclosures, financial reporting or internal controls.

Consumer class actions focus on a company’s violations of data protection obligations and infringements of privacy rights under consumer protection laws, but shareholder class actions are grounded in US securities law.

“We are not involved in any case on behalf of those whose data was compromised,” Kim said, drawing a line between the investor lawsuit and any consumer-related claims.

The Rosen Law Firm and Kim were involved in a securities class action against Coupang, which claimed that Coupang’s initial public offering registration statement contained misleading disclosures that defrauded shareholders during and after its US market debut in 2021.

The Rosen Law Firm filed a securities class action in 2022, but the case was later taken over by different lead plaintiffs. A US federal court dismissed the case with prejudice in September, meaning the claims cannot be refiled, although the plaintiffs have indicated they plan to appeal the ruling.

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