SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP announces that it has filed a class action lawsuit seeking to represent purchasers of New Oriental Education & Technology Group Inc. (NYSE: EDU) American Depository Shares (“ADSs”) between April 24, 2018 and July 22, 2021, both dates inclusive (the “Class Period”) and charging New Oriental Education as well as certain of its top executives with violations of the Securities Exchange Act of 1934. The New Oriental Education class action lawsuit was commenced on February 4, 2022 in the Southern District of New York and is captioned Bricklayers’ & Allied Craftworkers Local #2 Albany, NY Pension Fund v. New Oriental Education & Technology Group Inc., No. 22-cv-01014.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud. You can view a copy of the complaint by clicking here.
If you suffered significant losses and wish to serve as lead plaintiff of the New Oriental Education class action lawsuit, please provide your information by clicking here. You can also contact attorney J.C. Sanchez of Robbins Geller by calling 800/449-4900 or via e-mail at jsanchez@rgrdlaw.com. Lead plaintiff motions for the New Oriental Education class action lawsuit must be filed with the court no later than April 5, 2022.
CASE ALLEGATIONS: New Oriental Education provides educational programs, services, and products to students across China and delivers online courses through its online learning platforms. 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’s founder and Chairman of the Board of Directors during the Class period, defendant Michael Minhong Yu, as a member of the National People’s Congress, was a delegate at the Two Sessions parliamentary meetings.
The New Oriental Education class action lawsuit alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) New Oriental Education’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 Education to an extreme risk that more draconian measures would be imposed on New Oriental Education; (ii) New Oriental Education 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 Education’s programs to its customers; (iii) New Oriental Education had falsified teacher qualifications and experience to increase student enrollments; (iv) New Oriental Education had defied prior government warnings against linking school enrollments with the provision of private tutoring services; (v) as a result, New Oriental Education 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 Education’s business and interests; (vi) 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 Education and its business; and (vii) consequently, defendants’ positive statements about New Oriental Education’s business, operations, and prospects were materially misleading and lacked a reasonable factual basis.
As news of the Chinese government’s focus during the Two Sessions parliamentary meetings on the after-school tutoring industry spread, the price of New Oriental Education ADSs began to drop from $18.24 when the market closed on March 5, 2021, to $14.50 by April 1, 2021, a nearly 21% decline.
Then, 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. On this news, the price of New Oriental Education ADSs dropped from $14.28 when the market closed on May 11, 2021, to $11.51 when the market closed on May 13, 2021.
Thereafter, on June 1, 2021, Chinese regulators announced that they had fined 15 off-campus training institutions, including New Oriental Education, 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 Education 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, including a large number for problems related to difficulties in receiving appropriate refunds from New Oriental Education. In addition to the issues outlined above, New Oriental Education 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 this news, the price of New Oriental Education ADSs dropped approximately 16% over a two-day period.
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 published an “update” on the new regulations, which stated that New Oriental Education “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.” On this news, the price of New Oriental Education ADSs plummeted by nearly 70%, further damaging investors.
THE LEAD PLAINTIFF PROCESS: The Private Securities Litigation Reform Act of 1995 permits any investor who purchased New Oriental Education ADSs during the Class Period to seek appointment as lead plaintiff in the New Oriental Education class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the New Oriental Education class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the New Oriental Education class action lawsuit. An investor’s ability to share in any potential future recovery of the New Oriental Education class action lawsuit is not dependent upon serving as lead plaintiff.
ABOUT ROBBINS GELLER RUDMAN & DOWD LLP: With 200 lawyers in 9 offices nationwide, Robbins Geller Rudman & Dowd LLP is the largest U.S. law firm representing investors in securities class actions. Robbins Geller attorneys have obtained many of the largest shareholder recoveries in history, including the largest securities class action recovery ever – $7.2 billion – in In re Enron Corp. Sec. Litig. The 2020 ISS Securities Class Action Services Top 50 Report ranked Robbins Geller first for recovering $1.6 billion for investors that year, more than double the amount recovered by any other securities plaintiffs’ firm. Please visit http://www.rgrdlaw.com for more information.
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