The Class: Shareholder rights law firm Robbins LLP informs investors that a shareholder filed a class action on behalf of purchasers of New Oriental Education & Technology Group Inc. (NYSE: EDU) American Depository Shares ("ADSs") between April 24, 2018 and July 22, 2021, for violations of the Securities Exchange Act of 1934. New Oriental provides educational programs, services, and products to students across China and delivers online courses through its online learning platforms.
If you suffered a loss due to New Oriental Education & Technology Group Inc.'s misconduct, click here.
What is this Case About: New Oriental Education & Technology Group Inc. (EDU) Made Fraudulent Statements About its Business Prospects
According to the complaint, during the class period, New Oriental's K-12 after-school tutoring courses was the Company's "key growth driver" and instrumental to its revenue growth. At the same time, defendants assured investors the Company was complying with all applicable government policies, laws, and regulations related to the Chinese tutoring industry. In reality, defendants routinely engaged in illicit business practices designed to inflate the Company's financial results.
New Oriental purportedly: (i) engaged in deceptive marketing tactics and abusive business practices that flouted Chinese regulations and policies and exposed the Company to an extreme risk that more draconian measures would be imposed on the Company; (ii) engaged in misleading and fraudulent advertising practices, including the provision of false and misleading discount information designed to obfuscate the true cost of the Company's programs to its customers; (iii) falsified teacher qualifications and experience to attract customers and increase student enrollments; and (iv) defied prior government warnings against linking school enrollments with the provision of private tutoring services. This conduct exposed New Oriental to an extreme undisclosed risk of adverse governmental action, as well as immense legal, regulatory, and reputational fallout.
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. On this news, the price of New Oriental's ADSs plummeted from $6.40 on July 22, 2021, to just $1.94 on July 26, 2021, a nearly 70% decline. Just five months earlier, New Oriental's shares traded at a class period high of $19.97.
On November 14, 2021, New Oriental announced it would cease offering academic subjects to students from kindergarten through grade nine across all learning centers in China by the end of 2021. The Company stated that the cessation of these activities would have “a substantial adverse impact on the Company’s revenues for the fiscal year ending May 31, 2022 and subsequent periods" given that such revenues "accounted for approximately 50% to 60% of our group's total revenues for reach fiscal year." On January 10, 2022, media reports stated New Oriental had fired 60,000 employees following the government crackdown and suffered a 90% market decline and 80% revenue drop. Finally, on January 24, 2022, New Oriental issued a "profit warning" stating that the Company would record a net loss of between $800 million and $900 million for the six months ended November 30, 2021, compared to a profit of $228.6 million for the comparable period in the prior year.
Next Steps: If you purchased shares of New Oriental Education & Technology Group Inc. (EDU) ADSs between April 24, 2018 and July 22, 2021, you have until April 5, 2022, to ask the court to appoint you lead plaintiff for the class. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
Contact us to learn more:
Aaron Dumas
(800) 350-6003
adumas@robbinsllp.com
Shareholder Information Form
About Robbins LLP: A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. To be notified if a class action against New Oriental Education & Technology Group Inc. settles or to receive free alerts when corporate executives engage in wrongdoing, sign up for Stock Watch today.
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