NEW YORK, July 25, 2012 (GLOBE NEWSWIRE) -- Pomerantz Haudek Grossman & Gross LLP has filed a federal securities class action against New Oriental Education & Technology Group Inc. ("New Oriental" or the "Company") (NYSE:EDU) and certain of its officers. The class action (12 Civ. 5724), filed in United States District Court, Southern District of New York, is on behalf of all persons or entities who purchased New Oriental American Depositary Shares ("ADS") between July 21, 2009 and July 17, 2012, inclusive (the "Class Period"). This class action seeks to recover damages caused by defendants' violations of the federal securities laws and to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 against the Company and certain of its top officials.
If you are a shareholder who purchased New Oriental securities during the Class Period, you have until September 21, 2012 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 Rachelle R. Boyle at rrboyle@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
New Oriental provides private educational services, primarily in China. The Complaint alleges that throughout the Class Period, the Company made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically the Company failed to disclose that: (1) the Company improperly consolidated into its financial statements the earnings of a variable interest entity and its wholly-owned subsidiaries; (2) a significant number of the Company's schools and learning centers were not company-owned, but were rather operated by numerous franchisees; (3) the Company improperly consolidated franchisees' financial results to its financial statements; (4) the schools that conduct EDU's operations are state property, and not owned by EDU; (5) upfront franchise and other fees had inflated the Company's cash balances; (6) the Company lacked adequate internal and financial controls; and (7) as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times.
On July 17, 2012, the Company disclosed that the Securities and Exchange Commission "had issued a formal order of investigation" as to whether the Company appropriately consolidated the earnings of Beijing New Oriental Education & Technology (Group) Co., Ltd., a variable interest entity of the Company, and its wholly-owned subsidiaries. On this news, EDU's ADS plummeted $7.64 per ADS or more than 34%, to close at $14.62 per ADS on July 17, 2012.
On July 18, 2012, independent stock research firm Muddy Waters, LLC issued an analyst report with a strong sell rating, predicting that the Company "will have a significant restatement, and that its auditor will resign." On this news, EDU's ADS declined an additional $5.12 per ADS or more than 35%, to close at $9.50 per ADS on July 18, 2012.
The Pomerantz Firm, with offices in New York and Chicago, 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, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 75 years later, the Pomerantz Firm 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 defrauded investors. See www.pomerantzlaw.com.