NEW YORK (TheStreet) -- Shares of Vipshop Holdings (VIPS) are down by 2.41% to $24.88 in late afternoon trading on Thursday, after litigation firm Milberg LLP announced it has filed a class action lawsuit against the China-based online retailer, which claims that the company and some of its officers violated securities law by "disseminating false and misleading statements to the investing public."
The suit was filed in the U.S. District Court for the Southern District of New York. The stock is trading on heavy volume and so far today, 23.23 million shares of Vipshop Holdings have exchanged hands as compared to its average daily volume of 6.94 million shares.
Milberg is bringing the suit on behalf of purchasers of Vipshop securities for the period between February 17, 2015 and May 11, 2015.
The firm is claiming that during this period the company made "false and/or misleading statements" and didn't disclose that it manipulated and overstated sales, receivables, profit, cash flows, and asset accounts including inventory and investments.
It is also alleged that the company's financial statements contain GAAP violations and that its internal controls over financial reporting was ineffective and as a result Vipshop's public statements were "materially false."
Vipshop has yet to issue a statement about the recent set of allegations against the company.
However, the company did make a statement on Friday, May 15, regarding complaints made against it by a short seller:
"Vipshop has been and will always endeavor to be in compliance with applicable U.S. and PRC laws and regulations. Vipshop believes the allegations are based upon unsupported speculation and contain numerous errors, representing a general misunderstanding of the company's business model and are entirely groundless."