NEW YORK, March 8, 2022 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against New Oriental Education & Technology Group Inc. ("New Oriental" or the "Company") (NYSE: EDU) and certain of its officers. The class action, filed in the United States District Court for the Southern District of New York, and docketed under 22-cv-01876, is on behalf of a class consisting of all persons who purchased New Oriental American Depository Shares ("ADSs") between April 24, 2018 and July 22, 2021, both dates inclusive (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act") against New Oriental and certain of the Company's senior officers and directors.
If you are a shareholder who purchased or otherwise acquired New Oriental ADSs during the Class Period, you have until April 5, 2022 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at newaction@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
New Oriental provides educational programs, services, and products to students across the People's Republic of China ("China" or the "PRC") and delivers online courses through its online learning platforms. In the early 2000s, the Company entered the K-12 after-school tutoring sector. Moreover, in 2005, New Oriental commenced its online education services through its Koolearn platform. The Company now provides comprehensive online education services through its subsidiary, Koolearn Technology Holding Limited.
In February 2018, the Chinese government released a set of regulations aimed at reining in excessive tutoring fees and limiting the perceived societal harm resulting from the ubiquity of for-profit tutoring programs such as those offered by New Oriental. Among other changes, the regulations prohibited after-school tutoring institutions from providing courses more advanced than the syllabus and curricula applicable to the respective primary and secondary school students, providing courses designed to enhance exam-taking skills, and linking school enrollment with tutoring results. Overall, the regulations were aimed at reducing disparities in school performance between relatively affluent students able to afford after-school tutoring and those that could not.
Because New Oriental operates in a highly regulated industry within China, the impact of new laws and regulations impacting the Chinese tutoring industry and the Company's compliance with the Chinese regulatory framework and government prerogatives are of material importance to investors. In fact, New Oriental acknowledged the material importance of maintaining strict compliance with Chinese laws, regulations, and government prerogatives. In New Oriental's Form 20-F filed with the SEC on September 16, 2020, New Oriental stated that the Company was "continuously making efforts to comply with the requirements under these regulations and implementations" governing after-school tutoring businesses imposed by the Chinese government, and any failure to do so could "materially and adversely affect [New Oriental's] business and results of operations."
The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) 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 the Company to an extreme risk that more draconian measures would be imposed on the Company; (ii) 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 the Company's programs to its customers; (iii) New Oriental had falsified teacher qualifications and experience in order to attract customers and increase student enrollments; (iv) New Oriental had defied prior government warnings against linking school enrollments with the provision of private tutoring services; (v) as a result of the foregoing, 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 the Company's business and interests; (vi) the new rules, regulations, and policies to be implemented by the Chinese government following China's annual "Two Sessions" parliamentary meetings were far more severe than represented to investors by Defendants and in fact posed an existential threat to the Company and its business; and (vii) as a result of the foregoing, Defendants' positive statements about the Company's business, operations, and prospects were materially misleading and lacked a reasonable factual basis.
On April 25, 2021, media reports revealed that the City of Beijing had fined four online education agencies, including the New Oriental subsidiary Koolearn, the maximum fine of 500,000 yuan (approximately $80,000) each for misleading customers with false advertising regarding course pricing.
On May 12, 2021, news reports revealed that an impending crackdown by the Chinese government on the private tutoring sector would be further reaching and more drastic than previously publicly known, including that regulators had already taken adverse actions against New Oriental and other for-profit tutoring companies.
On this news, New Oriental's ADS price fell $2.77 per ADS, or 19.4%, over the following two trading sessions to close at $11.51 per ADS on May 13, 2021.
On June 1, 2021, Chinese regulators announced that they had fined fifteen off-campus training institutions, including New Oriental, for illegal activities such as false advertising and fraud.
On this news, New Oriental's ADS price fell $1.77 per ADS, or 16%, over the following two trading sessions to close at $9.32 per ADS on June 3, 2021.
Then, 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, effectively ending any potential growth in the for-profit tutoring sector in China.
On July 25, 2021, New Oriental published an "update" on the new regulations, which stated that the Company will "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, New Oriental's ADS price fell $4.46 per ADS, or nearly 70%, over the following two trading sessions to close at $1.94 per ADS on July 26, 2021.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomlaw.com
CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
888-476-6529 ext. 7980
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SOURCE Pomerantz LLP
