NEW YORK, NY / ACCESSWIRE / April 28, 2020 / Labaton Sucharow LLP, a leading and award-winning investor rights law firm, announces a securities class action complaint has been filed on behalf of purchasers of GSX Techedu Inc (GSX) securities resulting from allegations that GSX may have issued materially misleading business information to the investing public.
GSX Techedu Inc. is a technology-driven education company and provides online K-12 after-school tutoring services in the People's Republic of China. Its K-12 after-school tutoring courses cover various K-12 academic subjects, including mathematics, English, Chinese, physics, chemistry, biology, history, geography, and political science. The company also provides English courses for children in kindergarten; and courses that help children in grade one through grade seven.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) GSX overstated its profitability, revenue, student enrollment figures, teacher qualifications, and teacher selection process; (ii) the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Company's financial results; and (iii) as a result, the Company's public statements were materially false and misleading at all relevant times.
On February 25, 2020, Grizzly Research LLC ("Grizzly") published a report highlighting multiple alleged issues with GSX's business and financial operations (the "Grizzly Report"). Specifically, the Grizzly Report alleged, among other issues, that the Company "has been drastically overstating its profitability in its US public filings, especially for 2018"; Grizzly "found multiple strong indications of past and current order ‘brushing,'" which are "essentially fake student enrollments to boost student count"; "many of GSX's reported students do not actually exist"; and "[w]hile [GSX] touts its high-quality teacher recruitment mechanism, [Grizzly] found a sign-up website that was not functional, multiple allegations of GSX hiring teachers right out of college with no prior experience, and fabricated teachers profiles."
Following publication of the Grizzly Report, GSX's ADS price fell $1.33 per share, or 2.93%, to close at $44.09 per share on February 25, 2020.
Then, on April 14, 2020, Citron Research ("Citron") published a report highlighting additional alleged issues with GSX's business and financial operations (the "Citron Report"), including, among other issues, that the Company's "2019 revenue was overstated by 70%," that "sales revenues are largely exaggerated," and that the Company's "filings are riddled with suspicious transactions."
Following publication of the Citron Report, GSX's ADS price fell $0.20 per share, or 0.64%, to close at $31.20 per share on April 14, 2020-a total decline of 31.31% since the truth concerning GSX's alleged fraud began to emerge.
If you are a ADS, option or derivative holder that suffered losses in GSX, and wish to participate, learn more, or discuss the issues surrounding the investigation, please contact David J. Schwartz using the toll-free number (800) 321-0476 or via email at email@example.com.
About the Firm
Labaton Sucharow LLP is one of the world's leading complex litigation firms representing clients in securities, antitrust, corporate governance and shareholder rights, and consumer cybersecurity and data privacy litigation. Labaton Sucharow has been recognized for its excellence by the courts and peers, and it is consistently ranked in leading industry publications. Offices are located in New York, NY, Wilmington, DE, and Washington, D.C. More information about Labaton Sucharow is available at www.labaton.com.
SOURCE: Labaton Sucharow LLP
View source version on accesswire.com: