The share price of JD.com, the Chinese retail giant, has plunged by more than six percent, hitting an 18-month low, in early trading this afternoon. It comes after the chief executive of the company was arrested and released on the suspicion of criminal sexual conduct in the United States over the weekend.
Richard Liu founded the firm in 1998. He has been able to return to China after being arrested by the Minneapolis police last Friday and later released on Saturday morning.
Local police disclosed that an “active investigation” into the founder of JD.com is still ongoing.
So far, the shares in JD.com have dropped by approximately 25 percent this year.
Spokespeople and lawyers for Liu have maintained the innocence of the retail tycoon. They said that he was released “without any charges and without a requirement for bail” over the “unsubstantiated” claims. A Minnesota-based lawyer for Liu said that the Chinese magnate has denied any wrongdoing and that he did not expect his client to be charged
According to sources who spoke with the Financial Times, the case was brought against Liu by a Chinese student at the University of Minnesota. Liu is also a student of the school’s doctoral business administration programme.
The decline of the stock underscores the uncertainty that is hanging over the fate of Liu. He holds a tight grip on the decision making at the second largest e-commerce company in China.
Liu holds almost 80 percent of the voting rights of the company. The rules of JD.com demand that Liu should be present at board meetings in order for the board to make decisions, even though it was not immediately clear if he has to be physically present or if he could participate by teleconference.
The company is backed by Alphabet Inc’s Google, China’s Tencent Holdings, and Walmart Inc. It is looking to improve its international reach even as it experiences stiff competition from its rival, Alibaba Group Holding Ltd, at home.