In this segment from Motley Fool Money, host Chris Hill and senior analysts Andy Cross, Matt Argersinger, and Ron Gross discuss the still-evolving story that Richard Liu, CEO and founder of JD.com (NASDAQ:JD), was arrested recently in Minneapolis on suspicion of rape. No charges were filed and Liu was released after several hours in custody. The police investigation is ongoing. Shareholders in the largest direct-to-consumer retailer in China need to know that "an investment in JD.com is very much an investment in CEO and founder Richard Liu."
A full transcript follows the video.
This video was recorded on Sept. 7, 2018.
Chris Hill: Last week in Minneapolis, JD.com founder and CEO Richard Liu was arrested after an allegation of rape. He was later released and is back in China. The company has said Liu is willing to cooperate with authorities further if asked. Matt, this is an interesting story on several levels. What I'm struck by is the conflicting reports we're getting, both from U.S. media and from the media in China. As of this taping right now, the investigation is still ongoing.
Matt Argersinger: It's still ongoing, and I think it's something that, the allegations have to be taken very seriously. I think, as Andy just pointed out about Tesla, an investment in JD.com is very much an investment in CEO and founder Richard Liu. He's the founder, he built the business basically from a small electronics store 20 years ago. He's built it into the largest direct-to-consumer retailer in China. He's a billionaire. He's also somewhat of a celebrity figure. He owns 16% of the stock, but also controls 80% of JD.com's voting power, to the point where the board of directors at JD really can't make decisions without Richard Liu involved.
These allegations are serious. We don't know the facts. It sounds, from what JD has said, like there aren't any charges coming. If that is the case, and that does prove out, the stock is likely going to rally, because it's been hit pretty hard after this news. We'll have to see. I worry, if there's even a sliver of credibility to the allegations -- it's not just JD's reputation or Richard Liu's reputation. You have companies like Alphabet, Walmart, Tencent, who have taken major stakes in this business and have partnered with JD.com in a number of long-term initiatives. They're definitely not going to stake their reputation on what happens with JD.com.
Hill: Well, and on top of all that, he doesn't really have a second in command, does he?
Argersinger: No, he doesn't.