TAL Education Group

Investigation
07/22/2021

Initial Lawsuit
02/04/2022

Lawsuit Progression
04/05/2022

Investigation

Continous Holding
April 26, 2018 to July 22, 2021
Proposed Claim
Securities Violation

This investigation follows TAL’s statements regarding its marketing tactics, advertising practices, customer reviews, teachers qualifications and Chinese adverse enforcement actions & fines.

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
$6	$20.52	$-14.52	-70.76%

See more on Factual Timeline

Initial Lawsuit

First Complaint - 02/04/2022

This is a securities class action on behalf of all persons who purchased TAL Education Group American depository shares (ADSs) between April 26, 2018 and July 22, 2021, both dates inclusive.

Filing Date
02/04/2022
Class Period
04/26/2018 to 07/22/2021
Transgression
Securities Violation
Filing Firms
Robbins Geller Rudman & Dowd LLP
Ademi LLP
Case Title
Sun v. TAL Education Group et al
Docket Number
1:22-cv-01015
Court
New York Southern 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:

(a) that TAL’s revenue and operational growth was the result of deceptive marketing tactics and illicit business practices that flouted Chinese laws, regulations and policies, and exposed the company to an extreme risk that more draconian measures would be imposed on the company
(b) that TAL 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, the creation of fake customer reviews designed to fraudulently lure new customers to TAL programs, the misrepresentation of teacher qualifications and course qualities, and the marketing of rigged promotional events;
(c) that TAL had defied Chinese policies designed to alleviate the burden imposed by tutoring services on students and their families, including by imposing hefty advances and recurring debt payments on course enrollees, by offering courses designed to give affluent students unfair advantages, by holding courses outside of allowable tutoring hours, and by linking for-profit courses to government-mandated schooling;
(d) that, as a result of the foregoing, TAL 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 financial interests;
(e) that the new rules, regulations and policies to be implemented by the Chinese government following the 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
(f) that, as a result of the foregoing, TAL’s historical growth was not sustainable or the result of legitimate business tactics as represented, and defendants’ positive statements about the company’s business, operations, and prospects were materially false and misleading and lacked a reasonable factual basis.