17 Education & Technology Group Inc.

Investigation
07/23/2021

Initial Lawsuit
07/19/2022

Lawsuit Progression
09/19/2022

Investigation

Public Offering Date
December 4, 2020
Proposed Claim
Securities Violation

Did 17 Education & Technology Group Inc. (YQ) mislead investors during its initial public offering (IPO)? The company allegedly misled investors about China’s upcoming regulation on its core business during its IPO. The company’s stock price has lost more than 90% of its value since the IPO.

This post is open for investors to gather facts, and findings and track their exposure to related lawsuits. We invite investors and shareholders to contribute to this investigation for their own benefit, add events to the factual timeline below and vote on events’ pertinence.

A lawsuit was subsequently filed. We will update this post as it unfolds.

Main Event

End of an era?

07/23/2021

Foreign Agency

Following alleged leak of internal government document, the Chinese Ministry of Education publishes new regulation 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. The regulations forbid the companies from going public or being acquired, foreign teachers outside mainland China from teaching and advertising and marketing.

(Opinions on Further Alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education, published by the General Office of the CPC Central Committee and the General Office of the State Council.)

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close	Previous close	Price variation	Percentage variation
$4.16	$5.64	$-1.48	-26.24%

See more on Factual Timeline

Initial Lawsuit

First Complaint - 07/19/2022

A 17 Education & Technology Group Inc. (YQ) filed a securities class action lawsuit on behalf of persons or entities who purchased or otherwise acquired its publicly traded securities, pursuant and/or traceable to the registration statement and related prospectus issued in connection with its December 2020 initial public offering (IPO).

Filing Date
07/19/2022
Public Offering Date
12/04/2020
Transgression
Securities Violation
Filing Firms
The Rosen Law Firm, P.A.
Case Title
Zhang v. 17 Education & Technology Group Inc. et al
Docket Number
2:22-cv-04937
Court
California Central District Court
Free File
Complaint

Allegations

According to the complaint, 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 allegedly failed to disclose to investors that:

(1) Defendant 17 Education & Technology’s K-12 Academic AST Services would end less than a year after the IPO;
(2) as part of its ongoing regulatory efforts, Chinese authorities would imminently curtail and/or end 17 Education & Technology’s core business; and
(3) as a result, defendants’ statements about the company’s business, operations, and prospects were materially false and misleading and/or lacked a reasonable basis at all relevant times.