SHANGHAI (Reuters) – Chinese courier ZTO Express and the underwriters of its New York stock market listing have been sued by a U.S. pension fund that alleges the firm exaggerated its profit margins to lure investors into its $1.4 billion initial public offering.

Morgan Stanley and Goldman Sachs Group Inc, which spearheaded ZTO’s IPO, are named in the class-action suit filed in Alabama state court by the city of Birmingham’s pension fund which says that they failed to do adequate due diligence.

ZTO’s listing was the largest U.S. listing in 2016 and was the biggest by a Chinese company since the $25 billion IPO of e-commerce giant Alibaba Group Holding Ltd in 2014.

Shares in Shanghai-based ZTO closed on Thursday at $15.68, about 20 percent below its IPO price of $19.50.

“We believe the claims are without merit and intend to defend ourselves vigorously,” a ZTO spokeswoman said in an e-mail to Reuters on Friday.

In the lawsuit dated May 16, the Birmingham Retirement and Relief System said ZTO had issued “untrue statements” and omitted “crucial realities” in its registration statement. It also said ZTO inflated profit margins by keeping certain low-margin segments of its business out of its financial statements.

“ZTO used a system of ‘network partners’ to handle lower-margin pickup and delivery services, while maintaining ownership of core hub operations. By keeping the ‘network partners’ businesses off its own books, the company was able to exaggerate its profit margins to investors,” it said.

Morgan Stanley declined to comment. Goldman did not immediately respond to Reuters’ requests for comment.

In ZTO’s pre-IPO filings to the stock exchange it said it had achieved operating profit margins of 15.4 percent and 25.1 percent in 2014 and 2015, respectively.

In unaudited results for the quarter ended March published on May 17, ZTO posted a 48 percent jump in net income from a year ago and a 34 percent spike in revenue.

The lawsuit also names ZTO IPO’s smaller underwriters China Renaissance Securities, Citigroup, Credit Suisse and J.P. Morgan. Credit Suisse did not respond to a Reuters’ request for comment while the rest declined to comment.

Individual defendants, including ZTO’s chief executive officer and chief financial officer, were also named.

The lawsuit against ZTO comes at a time when Alibaba-backed Chinese logistics company, Best Inc, is preparing to raise up to $750 million from an IPO in the United States.

Reuters was not immediately able to reach Greg L. Davis, the lawyer who filed the lawsuit on behalf of the city of Birmingham pension fund, for comment outside usual office hours.

According to an annual financial report published on the city of Birmingham website, the Birmingham Retirement and Relief System had assets of $1.05 billion at the end of June 2015.

The case is City of Birmingham Retirement and Relief System v. ZTO Express (Cayman) Inc., 01-cv-2017-902004.00, Circuit Court of Jefferson County, Alabama (Birmingham).