Billionaire Under Spotlight: Legal Troubles Of JD.Com’s Richard Liu Expose Other Side Of Star Entrepreneur

When Richard Liu, the Chinese billionaire and CEO of Inc, appeared three days ago for a signing ceremony in Beijing, he was all bright smiles as usual. But for everyone – from his staff, partners and those who only read about him in the media – nothing can be the same again. This is true whether or not he is eventually charged with criminal sexual misconduct in the United States.

Since Sunday night when the news of Liu’s arrest at the University of Minnesota for suspicion of sexual misconduct first surfaced, it has remained the hottest news item in China. As people eagerly consume any piece of new information about the case – from how many bottles of drinks the group consumed to photos of the female student sitting next to Liu – the public image of Liu that he carefully built over recent decades is slowly crumbling.

For years, the 45-year-old founder of China’s second largest e-commerce giant has repeatedly told his life story as one of "rags to riches" based on hard work and perseverance. Growing up as a poor village boy in Jiangsu province, he likes to recall the time he was selling electronic parts on the streets of Beijing’s Zhongguancun, or the early days of when the company had less than 10 people.

Now, as the incident unfolds and more new information surfaces, the public is learning the other side of Liu. The side that usually would not appear as headlines, if not for this rape accusation. The Internet is a ferocious place. With so many journalists and investigators digging deep into Liu’s present and past, there might be other "dirt" that will be unearthed.

How deals with this crisis is a reflection of how the company, and Liu, are perhaps behind the curve when it comes to disclosure and damage control as a public company or as a public figure. released a statement on September 3, saying that Liu has been "released soon after investigation without any charges and without requirement for bail". That statement turned out to be untrue as local police in Minnesota confirmed that investigations are ongoing.

Local police records show that Liu was arrested on a first-degree rape charge – the most severe charge of criminal sexual conduct – according to the Minnesota government. If charged and convicted, Liu could face a prison sentence of up to 30 years and a fine of up to US$40,000. This is significant enough that, as a listed company in the U.S., should have already disclosed to its shareholders. But so far, no such disclosure has been made.

Liu’s troubles are hitting his company hard as well. Shares of fell 5.97% to close at US$29.43 on September 4, the first trading day following Liu’s arrest was made public. The share price continued diving to US$27.25 as of closing September 6 in New York. The company is also facing class-action lawsuits, which allege that the company may have failed to disclose information related to Liu’s arrest.

Three U.S. law firms, Rosen Law Firm, Pomerantz LLP, and The Schall Law Firm said two days ago that they were investigating potential securities claims on behalf of shareholders of They are encouraging’s investors to file a class-action lawsuit to recover their losses as a result of the impact from the arrest. did not respond to China Money Network seeking comments.

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Nina Xiang is the co-founder and managing editor overseeing editorial content and product development at CMN. Before founding CMN in 2011, Nina worked at BusinessWeek magazine in Beijing and Institutional Investor magazine in New York, writing about business and financial services. While in New York, she also served as part-time correspondent for Shanghai's financial television channel, China Business Network, as well as China Radio International, China's national English-language radio network.