PC retailer Newegg’s stock price declined sharply last week after its majority owner disclosed that its chairman, He Zhitao, was reportedly detained by the Haibei Prefecture Supervisory Commission. According to its SEC disclosure, He’s family informed the company that they received a “Notice of Detention” and a “Notice of Investigation” from provincial authorities, and that he was subsequently detained. China established supervisory commissions as its primary anti-corruption investigatory body in 2018, with each province having its own agency that’s led by the National Supervisory Commission.
The company said that He’s detention is based on personal matters, and that its operations continue normally. “The Company has a sound governance structure and internal control mechanism, and it’s daily operations and management are handled by its executive officers,” Hangzhou Lianluo Interactive Information Technology Co. (Lianluo) said in its statement. “Currently, all other directors and executive officers are performing their duties normally, the Board of Directors is fulfilling its responsibilities in accordance with the laws, and all business activities of the Company and its subsidiaries are proceeding normally.”
Even though Lianluo insists that He was detained due to personal matters, Newegg’s stock still took a nosedive; perhaps because he was arrested by an anti-corruption body. Because of this, several law firms are now calling for investors affected by the news as they look into the possibility of a class action lawsuit against the company for violating federal securities laws. "On January 21, 2026, Newegg disclosed that it had received a notice from the family of the Company’s controlling shareholder and chairman, He Zhitao, that he is being placed under investigation and has been detained for matters that 'pertain personally to Mr. He Zhitao,'" Glancy Prongay & Murray LLP said in a press release. "On this news, Newegg’s stock price fell $9.79, or 17.7%, to close at $45.53 per share on January 21, 2026, thereby injuring investors."
This isn’t the first time that investors and shareholders have attempted to sue a company because of a major drop in their investment. Earlier this year, Oracle bondholders filed a complaint against the company after claiming that it failed to disclose that it plans to release a bigger bond offering a few weeks after its initial bond offering, resulting in $1.3 billion in paper losses. Intel was also slapped with a lawsuit over its single-day $32 billion loss in 2024, although it was eventually dismissed the following year. Newegg's stock has since recovered some of its losses since the news broke.
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