TAL EDUCATION DEADLINE ALERT

Bragar Eagel & Squire, P.C. Reminds Investors that a Class Action Lawsuit Has Been Filed Against TAL Education Group and Encourages Investors to Contact the Firm - Seite 2

From March 4, 2021 through March 11, 2021, China held its annual “Two Sessions” parliamentary meetings. Media reports stated that attendees of the ongoing Two Sessions conference had proposed “stricter regulations” to rein in the online education industry, such as regulations aimed at enhancing teacher quality, limiting fee scams, reducing market “abuse” by large players like TAL, and reducing the stress that for-profit tutoring companies had placed on students in the Chinese educational system.

As news of the government’s focus on the after-school tutoring industry spread, the price of TAL ADSs began to drop from $76.04 when the market closed on March 5, 2021, to $56.31 by April 1, 2021, a 26% decline.

Then, on May 12, 2021, news reports revealed that the impending government crackdown on for-profit tutoring companies in China would be much more drastic and far reaching than previously publicly known. Sources stated that anticipated rules would include measures such as banning on-campus tutoring classes, the provision of tutoring services during weekend hours, and the imposition of industry-wide fee limitations.

On this news, the price of TAL ADSs dropped 13% over a two-day period.

Then, on June 1, 2021, Chinese regulators announced they had fined 15 off-campus training institutions, including TAL, for illegal activities such as false advertising and fraud. Among the violations by the 15 offenders were reportedly fabricating teacher qualifications, exaggerating the effects of training, and fabricating user reviews. The regulators gave examples of how TAL’s subsidiary, Xueersi, had advertised false parent user reviews in Beijing and Shanghai. The offending companies, including TAL, were hit with maximum penalties for their illegal business practices, totaling a combined $5.73 million. Officials stated that the crackdown on the for-profit tutoring industry had grown out of the Two Sessions parliamentary meetings held earlier in the year and followed a deluge of complaints against bad industry actors, including 155,000 complaints and reports for education and training services received by authorities in 2020 alone and over 47,000 similar complaints and reports received by authorities in the first quarter of 2021. In addition to the issues outlined above, TAL was reportedly found to have: (i) forced students to pay hefty advances and take on recurring debt payments in violation of Chinese law; (ii) offered courses that gave students unfair advantages in contravention of Chinese government policies; (iii) engaged in illegal bait-and-switch tactics; (iv) misrepresented teacher qualifications and course qualities; (v) mishandled user data; and (vi) rigged promotional events to defraud consumers.