Amber Education encounters class action

Author: Culily After the new Oriental (nyse:edu) in the U.S. capital market in the face of financial fraud accusations, the amber education (Nyse:ambo) has become another because of financial problems triggered class action enterprises. The Beijing time February 28, the amber education share price fell sharply, as close as 16.67% reported 1.3 U.S. dollars, turnover than the monthly 140,000 U.S. dollars soared to 390,000 U.S. dollars.　　Despite its already low share price, even a 16.67% per cent drop in losses has been small, but a new round of concern for Chinese education companies listed in the US has been sparked by lawsuits by investors for their "takeover fraud". It is noteworthy that for a long time, China's education enterprises have been difficult to list in the country, many education industry enterprises, including New Oriental, Zheng Bao, Hong Cheng and so on have chosen to be listed in the United States.　　However, the U.S. capital market to monitor the market model of shorting, is giving Chinese enterprises a series of "acclimatized" symptoms: On the one hand is the all-pervasive, on the other hand, China's education enterprises in the development model of the problems are also beginning to gradually exposed. Zhang Yi, a lawyer at China silver law firm in the United States, told the Chinese business News reporter, "The encounter of Chinese listed companies in the United States exposes the differences in the way of thinking between China and America, and since Chinese companies have chosen to list in the U.S., they should regulate their behavior according to the requirements of the U.S. capital markets, and try not to leave a handle on the short sellers.　　"Short-sellers ' handles" Companies ' quarterly and earnings reports will be seen as a major disadvantage if they are not released on time.　　It is noteworthy that in the case of the amber education dealing with investors, the mines were laid short in the beginning. According to the amber Education July 5, 2012 in the U.S. Securities and Exchange Commission (SEC) official website of the disclosure of form 6-k: "July 2, 2012, a former employee accused Amber 2008 acquisition of a training school has financial misconduct and wrongful acts." Amber's earliest response to the allegation was timely.　　According to publicly reported materials, July 3, the Amber Board announced the establishment of an independent audit committee to conduct an internal investigation to thoroughly review these allegations.　　However, the adverse information on amber occurred on July 5, when Amber's third chief financial officer, Mr.gareth Kung, announced his resignation.　　In response to the company's case against short charges, Gary, senior vice president of China, and head of financial and professional liability insurance, said, "Companies should take the first steps to investigate the facts and communicate the findings to investors in a timely manner". Zhang Yi told reporters, "The enterprise once encountered short, I would recommend it in 7 days to give a reply to this incident, and 7 days, the enterprise in the end there is no allegation of the fact that should be able to investigate clearly." "At the same time, Zhang Yi also pointed out that" the resignation of Auditors, corporate finance officials are often the investors as a negative message to the enterprise, and these people (institutions) resign at this critical point, mainly fromReasons why some information cannot be disclosed or clarified. In addition, the company's quarterly, financial results, if not published on time will be regarded as a major disadvantage. "Clearly, July 6, 2012, the shares of the Amber fell 19.61%, and all the way down, to verify investors on the resignation of financial leaders of the negative judgment." As of January 18, 2013, the closing price of amber Education was only 2.15 dollars.　　On the deadline, the Independent audit Committee of the Amber board of Directors did not have any results, and Amber's earnings for the second quarter of 2012 were repeatedly delayed. "In general, if the company's earnings are not available for a quarter, the earnings after that quarter will not be available, because the data to be reported later needs to be based on the previous data."　　Zhang Yi said it was precisely this reason that Amber had not released any earnings data since the second quarter of 2012.　　The takeover model has led to disputes over the trust crisis that China's listed companies are facing in the years ahead. As of press day, the Amber Education reporter's reply is: "Because the company is about to report earnings, is in the silent period, currently unable to answer some questions." "However, the industry personage from the third party, Li Hong, said," Although the amber encounter ' financing-mergers-refinancing ' questioning, doubt it is a pure use of financial packaging and capital leverage big business, but in my more than 10 years of contact, the facts may be different from these suspicions. "For the business model that the amber education business has caused in different market segments, Li Hong told reporters," any industry development may encounter a painful period or fierce competition in the process, some business models do not fully show their advantages, it is normal to ask questions, but should not completely erase the possibility of a model. " "Li Hong's outlook on the education of the Amber is that," the division of its education, such as basic education (primary and secondary education), vocational education, enterprise education is a ladder, some people can complete a stage of education after the choice to enter the next stage of education, Amber's acquisition of the top three in each field gives it the advantage of stacking in different niches, but at the moment it is hard to highlight.　　"However, the most pressing question for Amber is how to explain the question of how the merger model is being challenged on the road to success," he said. According to previous media reports, "Byronbrown and other investors are suing Amber, considering that the 2008 Amber acquisition of the Changsha Auction School (Changshastudyschool), in fact, is simply the use of payment to buy the latter's name and revenue data for the former IPO preparation, The cash money it bought was later turned back to Amber in the form of some kind of false software revenue. "It is understood that when Amber acquired the school in 2008, a total of 52.282 million yuan of the acquisition in the" half cash + half of the stock "model to achieve (of which the cash is 25 million yuan, plus the equivalent of 27.282 million yuan to be listed in the shares, equivalent to 1400560 common stock).But this 25 million yuan of cash, Changsha competition is not the school can be obtained. According to the agreement, the school should cooperate with Amber to "buy" the teaching software from the "buy money" which is transferred every year to Amber's Amber online, to form the revenue of the current sales software product of the amber online.　　At the same time, the school's annual revenue performance as an extracurricular training program is also included in the ' total net revenue ' of amber education.　　Obviously, the reason Amber is being questioned is that its "cash + stock" acquisition model is that the cash it pays is eventually returned to Amber in the form of the purchase of teaching software. However, this is not a fundamental problem. Zhang Yi told reporters, "if Amber agreed to pay cash in the agreement, then forced to ask the acquirer to buy their software as an offset, then the behavior of amber will be a problem, and if the cash payment discount software sales, then there is no disadvantage to amber." "However, this disadvantage refers only to the disputed view of the acquirer, and for investors, this operation is suspected of linked transactions, it depends on the price of their sales software and market prices are consistent, and whether there will be a high problem."　　"Zhang Yi said.　　The focus of the issue is that amber education, when it first acquired these schools, made the prices of these schools higher, and then correspondingly raised the sales of the teaching software. For investors, however, to verify that the doubt is true, the financial statements do not reflect these details and need to look at the audit papers of the enterprise.　　However, this will return to another old topic, that is, "CPA and CPA firms shall not provide audit working papers to domestic and foreign institutions or individuals in violation of the relevant provisions of the State".　　It can be expected that before the audit of the issue of the draft papers, many of the speculation and controversy will be difficult to obtain a definitive conclusion, but another obvious fact is that China's listed companies in the United States are facing the future of the trust crisis. In fact, in the 2012, only two Chinese companies landed in U.S. capital markets, including the NYSE and NASDAQ, which also made it possible for Chinese education companies to come out on the market to face strategic adjustment needs.