JD.com shares fall after CEO’s arrest and release

JD.com shares fall after CEO’s arrest and release (Reuters pic)

SHANGHAI: Chinese retailer JD.com Inc’s stock fell about 3.6% in early trading on Tuesday after the firm’s CEO was arrested in the United States on suspicion of criminal sexual conduct and later released.

Richard Liu, who founded the firm in 1998, was arrested by police in the US city of Minneapolis on Friday and released the next day before returning to China. US markets were closed on Monday.

Minneapolis police said on Sunday that “an active investigation” was under way. A Minnesota-based lawyer for Liu said on Monday the Chinese magnate has denied any wrongdoing and that he did not expect his client to be charged.

The stock’s decline underscores the uncertainty hanging over the fate of Liu, who holds a tight grip over decision making at China’s second largest e-commerce firm.

JD.com’s rules require Liu, who holds nearly 80% of the company’s voting rights, to be present at board meetings for the board to make decisions, although it was not immediately clear if he has to be physically present or could participate by teleconference.

The company, backed by Walmart Inc, Alphabet Inc’s Google and China’s Tencent Holdings, is looking to bolster its international reach even as it faces stiff competition from rival Alibaba Group Holding Ltd at home.

Shares in JD.com have fallen about 25% this year.