New Oriental Education & Technology Group Inc, EDU Securities Lawsuit

Company:	New Oriental Education & Technology Group Inc,
Ticker Symbol:	EDU
Class Period:	Jul-21-09 to Jul-17-12
Date Filed:	Jul-23-12
Lead Plaintiff Deadline:	Sep-21-12
Court:	Central District of California
Allegations:

San Francisco, CA: A securities class action lawsuit has been filed in the United States District Court for the Central District of California on behalf of a class consisting of all persons or entities who purchased the American Depositary Shares ("ADSs") of New Oriental Education & Technology Group Inc. ("EDU"or the "Company") (NYSE:EDU) between July 21, 2009 and July 17, 2012, inclusive (the "Class Period").

The Complaint charges EDU and certain of the Company' executive officers with violations of federal securities laws. EDU provides private educational services, primarily in China. The Complaint alleges that throughout the Class Period the defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the EDU' business, operations and prospects. Specifically, the Complaint alleges that the defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company lacked a sufficient basis for the consolidation of Beijing New Oriental Education & Technology (Group) Co., Ltd., a variable interest entity of the Company, and its wholly-owned subsidiaries, into EDU' consolidated financial statements; (2) that, as a result, the Company was improperly consolidating Beijing New Oriental Education & Technology (Group) Co., Ltd., into EDU' consolidated financial statements; (3) that, contrary to the Company' representations, EDU' entire store network is not company-owned because EDU has numerous franchisees; (4) that upfront franchise and other fees had inflated EDU' cash balances; (5) that the schools that conduct EDU' operations were ultimately state property; (6) that, as a result of the foregoing, the Company' financial results were misstated during the Class Period; (7) that the Company lacked internal and financial controls; and (8) that, as a result, the Company' financial statements and financial results were materially false and misleading at all relevant times.

On July 17, 2012, EDU disclosed that on July 13, 2012, the Company was informed that the SEC had issued a formal order of investigation captioned, "In the Matter of New Oriental Education & Technology Group Inc."According to EDU, the Company believes that the investigation concerns whether there is a sufficient basis for the consolidation of Beijing New Oriental Education & Technology (Group) Co., Ltd., a variable interest entity of the Company, and its wholly-owned subsidiaries, into EDU' consolidated financial statements. On this news, shares of the Company declined $7.64 per share, or 34.32%, to close on July 17, 2012, at $14.62 per share, on unusually heavy volume.

Thereafter, on July 18, 2012, a report, entitled "Initiating Coverage on EDU – Strong Sell,"was published by the research firm Muddy Waters Research. The firm rated EDU a "trong Sell because it is probable that EDU will have a significant restatement and that its auditor will resign."On this news, shares of the Company declined $5.12 per share, or 35.02%, to close on July 18, 2012, at $9.50 per share, on unusually heavy volume.

If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.

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Published on Jul-24-12