A lawsuit was filed on behalf of investors in New Oriental Education & Technology Group Inc. (NYSE:EDU) shares over alleged securities laws violations.
San Diego, CA -- (SBWIRE) -- 02/24/2022 -- An investor, who purchased shares of New Oriental Education & Technology Group Inc. (NYSE: EDU), filed a lawsuit in the U.S. over alleged violations of Federal Securities Laws by New Oriental Education & Technology Group Inc. in connection with certain allegedly false and misleading statements made between April 24, 2018 and July 22, 2021.
Investors who purchased shares of New Oriental Education & Technology Group Inc. (NYSE: EDU) have certain options and for certain investors are short and strict deadlines running. Deadline: April 5, 2022. NYSE: EDU investors should contact the Shareholders Foundation at firstname.lastname@example.org or call +1(858) 779 - 1554.
China based New Oriental Education & Technology Group Inc. provides private educational services under the New Oriental brand in the People's Republic of China.
From March 4, 2021 through March 11, 2021, China held its annual "Two Sessions" parliamentary meetings, where the two main political bodies of China meet, discuss, and reveal plans for China's policies involving the economy, military, trade, diplomacy, the environment, and more.
New Oriental Education & Technology Group 's founder and Chairman of the Board of Directors, Michael Minhong Yu, as a member of the National People's Congress, was a delegate at the Two Sessions parliamentary meetings.
On May 12, 2021, news reports revealed that the impending government crackdown would be further reaching and more drastic than previously publicly known. Sources stated that anticipated rules would include measures such as banning on-campus tutoring classes, the provision of tutoring services during weekend hours, and the imposition of industry-wide fee limitations.
Then, on June 1, 2021, Chinese regulators announced that they had fined 15 off-campus training institutions, including New Oriental, for illegal activities such as false advertising and fraud. Among the violations were reportedly fabricating teacher qualifications, exaggerating the effects of training, and fabricating user reviews. New Oriental was accused of faking the teaching experience of 76 teachers, a stunning 74% of all teachers surveyed. The offending companies were hit with maximum penalties for their illegal business practices, totaling a combined 36.5 million yuan ($5.73 million). Officials stated that the crackdown on the for-profit tutoring industry had grown out of the Two Sessions parliamentary meetings held earlier in the year and followed a deluge of complaints against bad industry actors, including 155,000 complaints and reports for education and training services received by authorities in 2020 and over 47,000 similar complaints and reports received by authorities in the first quarter of 2021. Many of these complaints were against New Oriental Education & Technology Group, including a large number for problems related to difficulties in receiving appropriate refunds from New Oriental. In addition to the issues outlined above, New Oriental reportedly: (i) provided false pricing information, including by stating that courses were being offered at a 90% discount when in fact the purported regular rate was never offered; (ii) provided fraudulent teacher certifications and other falsified credentials to prospective students; (iii) engaged in false publicity and price fraud; and (iv) failed to honor its contractual commitment to students. On
Finally, on July 23, 2021, China unveiled a sweeping overhaul of its education sector, banning companies that teach the school curriculum from making profits, raising capital, or going public. This drastic measure effectively ended any potential growth in the for-profit tutoring sector in China.
Two days later, on July 25, 2021, New Oriental Education & Technology Group published an "update" on the new regulations, which stated that New Oriental "will follow the spirit of the Opinion and comply with relevant rules and regulations when providing educational services" and "expects such measures to have material adverse impact on its after-school tutoring services related to academic subjects in China's compulsory education system."
Shares of New Oriental Education & Technology Group Inc. (NYSE: EDU) declined from $19.97 per share in February 2021, to as low as $1.74 per share on August 17, 2021.
The plaintiff claims that between April 24, 2018 and July 22, 2021 the defendants made false and misleading statements and failed to disclose that New Oriental's revenue and operational growth was the result of deceptive marketing tactics and abusive business practices that flouted Chinese regulations and policies and exposed New Oriental to an extreme risk that more draconian measures would be imposed on New Oriental, that New Oriental had engaged in misleading and fraudulent advertising practices, including the provision of false and misleading discount information designed to obfuscate the true cost of New Oriental's programs to its customers, that New Oriental had falsified teacher qualifications and experience to increase student enrollments, that New Oriental had defied prior government warnings against linking school enrollments with the provision of private tutoring services, that as a result, New Oriental was subject to an extreme undisclosed risk of adverse enforcement actions, regulatory fines and penalties, and the imposition of new rules and regulations adverse to New Oriental's business and interests, that the new rules, regulations, and policies to be implemented by the Chinese government following the Two Sessions parliamentary meetings were far more severe than represented to investors by defendants and in fact posed an existential threat to New Oriental and its business, and that consequently, defendants' positive statements about New Oriental's business, operations, and prospects were materially misleading and lacked a reasonable factual basis.
Those who purchased shares of New Oriental Education & Technology Group Inc. (NYSE: EDU) have certain options and should contact the Shareholders Foundation.
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