New Oriental trouble seems not finished, in the United States encounter class action

Absrtact: The trouble in New Oriental seems not finished. Although share prices have rebounded, July 24, GLANCYBINKOWGOLDBERGLLP, the US law firm, announced that it would buy new east from July 21, 2009 to July 17, 2012 under the Securities Trading Act 1934.

The troubles in new Oriental seem to have not finished.

Although share prices have rebounded, July 24, GLANCYBINKOW&GOLDBERGLLP, the US law firm, announced that it would, under the Securities Exchange Act of 1934, Representatives of all individuals or entities who purchased new Oriental American Depository receipts between July 21, 2009 and July 17, 2012 launched a class action lawsuit against New Oriental.

Fortunately, this lawsuit does not seem to kill the damage, the new Oriental stock price is stable, volume normal, July 24 share price floating 0.9% to 12.3 U.S. dollars.

Litigation has limited influence on new Oriental

According to the law firm, the new Oriental and the company's specific executives violated the provisions of the U.S. federal securities law, throughout the group proceedings, the new Oriental made a false or misleading statement, and did not disclose the new Oriental business, operations and prospects related to the important facts.

And these "counts" specifically include: lack of sufficient justification to incorporate the performance of its variable interest entities, Beijing New Oriental and its wholly-owned subsidiaries, into the financial statements of the new Oriental; it is not allowed to have franchise franchise operation, but it is obviously not in conformity with the fact; Use prepaid franchise fees and other expenses to elevate the new Oriental cash amount.

For this lawsuit, an executive at one of the country's education and training institutions was very calm, and he told the Daily economic news reporter that when the SEC was announced in New Oriental, the US had a law firm announcing that it was ready to prosecute the new east, so there was no real impact on the new Oriental.

In the case of Zhong Zhixin, the chief content director, the securities lawsuit is quite normal in the U.S. stock market, and any firm's share price could trigger such a lawsuit in a short period of time.

It is understood that such lawsuits are generally brought up by law firms, if the lawsuit is successful, investors in the compensation at the same time, law firms can receive compensation as a part of the remuneration; If the lawsuit fails, the law firm that brought the lawsuit will bear all the risk advance expenses. For investors, there is no loss, so such a securities lawsuit can be said to be quite common.

On June 13 this year, the BRONSTEIN,GEWIRTZ&GROSSMAN,LLC firm announced that it would initiate a class action against the Amber Education for shareholders who bought the amber education from May 18, 2011 to May 16, 2012. The previous E-commerce China's first Mai Lin, because of the IPO in the company's operations have been concealed in the United States suffered 6 of class action.

However, for the new Oriental lawsuit, Zhong Zhixin that this should not have any impact on the new Oriental, such as the number of securities litigation, but the probability of victory is generally slim.

All the trouble of joining?

In this lawsuit, the question of joining the new Oriental becomes the focus of glancybinkow& GOLDBERGLLP of American law firm.

The law firm believes that, compared with the new Oriental's statement, the new Oriental has a large number of franchise stores, the entire store network is not owned by the new Oriental, at the same time, prepaid franchise fees and other costs have raised the cash balance of new Oriental. The law proceeds from the conclusion that the financial performance of the new Oriental is falsely stated in the group proceedings.

In fact, from shorting institutions muddy water began to show the new Oriental CFO denied the presence of the recording, to the new Oriental Chairman Yu Yu (micro bo) to recognize the new Oriental's son brand bubble children and the stars exist to join, the market to join the doubt in the muddy water and the new Oriental game of continuous fermentation.

July 18, for the new Oriental brand bubble children exist "franchise" question, Mr Yu said, new Oriental brand bubble Children's child education in the country authorized 19 schools, the stars of the brand authorized 2 to join the school. In addition to the cost of joining, these affiliated schools own operating income has never been reflected in the new Oriental consolidated financial statements.

Since then, Mr Yu has also publicly stated that the recording was qiatouquwei by Muddy Waters.

But Muddy waters do not seem to compromise, a High-profile announcement: "We will release more than 21 stores in New Oriental report." ”

However, in and June Consulting senior consultant Hourich, this time, the new Oriental in the issue of joining is indeed a fault.

According to the long-term study of the new Oriental report Zhong Zhixin provided information, the new Oriental financial results did not explicitly put forward the existence of their joining the school and joining fees into the report.

Although Mr Yu later gave the reason for this, compared to the annual revenue of the new Oriental, the income of joining fee is negligible, as of the fiscal year 2010 and fiscal year 2011, this part of the so-called "joining fee income" accounted for the new Oriental total revenue of 0.009% and 0.045%.

But the muddy water is to use this tiny loophole to stir up the waves, in two days time, let the new Oriental share price evaporate 2 billion dollars.

In this respect, "Daily economic news" reporter to join the consultant in the name of the new Oriental brand bubble children to join the department, according to the data given by the staff, to join the bubble children's cooperation costs 3 years in the 600,000 ~100 million, the new Oriental licensing only the use of children's brand and the training to join the school.

Hourich that, although the franchise fee income on the overall revenue, but in accordance with the current bubble children 19 stores and the number of Stars 2 stores to join, the new Oriental through the join to obtain a considerable income. Not because of the overall revenue impact is not very small, not to be published, this involves business integrity issues.

In addition, there are reluctant to disclose the name of the analyst pointed out that for the new east, muddy water is absolutely more than a wave of ammunition, although do not know how to follow up, but the new Oriental in joining the omission is indeed handhold.