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Sonny St. John. v. Cloopen Group Holding Limited

Class Action Alleging Misleading Offering Documents Survives Motion to Dismiss

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The following e-filed documents, listed by NYSCEF document number (Motion 003) 24, 25, 26, 27, 28, 29, 30, 31, 44, 45, 46, 47, 48, 49, 50, 51, 55 were read on this motion to/for DISMISSAL. The following e-filed documents, listed by NYSCEF document number (Motion 004) 32, 33, 53 were read on this motion to/for DISMISSAL. The following e-filed documents, listed by NYSCEF document number (Motion 005) 34, 35, 36, 37, 38, 39, 40, 52 were read on this motion to/for DISMISSAL. DECISION + ORDER ON MOTION This is a putative class action alleging strict liability and negligence claims pursuant to Sections 11, 12(a)(2) and 15(a) of the Securities Act of 1933 (the 1933 Act) based on the final registration statement (the Registration Statement; NYSCEF Doc. No. 46) and Prospectus (the Prospectus; NYSCEF Doc. No. 28; the Prospectus together with the Registration Statement, hereinafter, collectively, the Offering Documents) issued by Cloopen Group Holding Limited (the Company) in connection with its February 9, 2021 initial public offering (the IPO) of 23 million American Depositary Shares (ADSs) at $16.000 per share where it raised $340.2 million in net proceeds. Dismissal is not warranted. According to the well-pled amended complaint (the AC; NYSCEF Doc. No. 23), the Offering Documents were materially misleading and violated the 1933 Act because, among other things, the Offering Documents (i) indicated that the Company’s dollar-based net customer retention rate was stable at a high rate when in fact it had nose-dived from approximately 95 percent to 63 percent in Q4 of 2020, which quarter closed approximately two months before the IPO (NYSCEF Doc. No. 23,

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