TAL Education Group
- Company Name
- TAL Education Group
- Stock Symbol
- Class Period
- April 26, 2018 to June 13, 2018
- Motion Deadline
- August 17, 2018
- Southern District of New York
The complaint charges TAL and certain of its officers with violations of the Securities Exchange Act of 1934. TAL provides comprehensive tutoring services to students in core academic subjects, such as mathematics, English, Chinese, physics and chemistry, mainly in the People’s Republic of China.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse facts about the Company’s business, operations and prospects, including that the Company had overstated its net income and that the Company’s net income was deteriorating. As a result of defendants’ false statements and/or omissions, TAL securities traded at artificially inflated prices of as high as $46 per share during the Class Period.
Then on June 13, 2018, Carson Block issued a report accusing the Company of issuing fraudulent profit figures by overstating its net income, net income margin and other essential accounting figures. The Carson Block report estimated that during the period from fiscal 2016 through fiscal 2018, TAL had “overstated net income by at least 43.6%,” and “that TAL’s cumulative net income margin during this period was only 8.8% (versus 12.4% reported)” and its fiscal 2018 “net income margin was only 10.4% (versus 11.6% reported).” According to the report, “TAL’s margins have deteriorated more than have been reported,” and “to cover this up, the company has resorted to fraud.” On this news, the price of the Company’s shares fell $7.02 per share, or over 15%, to close at $38.41 per share on June 13, 2018.