On April 3, 2017, Pomerantz LLP was appointed Co-Lead Counsel in a class action lawsuit against New Oriental Education & Technology Group Inc. (“New Oriental” or the “Company”) and certain of its officers. The class action, filed in United States District Court, District of New Jersey, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired New Oriental American Depositary Receipts (“ADRs”) between September 27, 2016 and December 1, 2016, both dates inclusive (the “Class Period”), seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
New Oriental is a Cayman Islands corporation headquartered in Beijing, People’s Republic of China (“PRC”). New Oriental provides private educational services under the New Oriental brand in the PRC.
The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) New Oriental engaged in college application fraud; and (2) as a result, defendants' statements about New Oriental's business, operations and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.
On December 2, 2016, Reuters published a report detailing allegations of academic fraud at the company. Specifically, Reuters reported that eight former and current New Oriental employees informed Reuters that New Oriental “engaged in college application fraud, including writing application essays and teacher recommendations, and falsifying high school transcripts.”
On that same day, Reuters reported that the American International Recruitment Council, which certifies agencies that recruit foreign students on behalf of U.S. colleges, will investigate the company in response to the Reuters report.
On this news, shares of the Company fell $6.99 per share or over 14% from its previous closing price to close at $42.00 per share on December 2, 2016, damaging investors.