SAN DIEGO–(BUSINESS WIRE)–Robbins Geller Rudman & Dowd LLP announces that a securities class action lawsuit has been filed in the District of New Jersey on behalf of purchasers of GSX Techedu Inc. (NYSE:GSX) securities between June 6, 2019 an April 13, 2020 (the “Class Period”). The case is captioned Wu v. GSX Techedu Inc., No. 20-cv-04457, and is assigned to Judge Esther Salas. The GSX Techedu securities class action lawsuit charges GSX Techedu and certain of its officers with violations of the Securities Exchange Act of 1934.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased GSX Techedu securities during the Class Period to seek appointment as lead plaintiff in the GSX Techedu securities class action lawsuit. A lead plaintiff acts on behalf of all other class members in directing the GSX Techedu securities class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the GSX Techedu securities class action lawsuit. An investor’s ability to share in any potential future recovery of the GSX Techedu securities class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff of the GSX Techedu securities class action lawsuit or have questions concerning your rights regarding the GSX Techedu securities class action lawsuit, please visit our website by clicking here or contact J.C. Sanchez at 800/449-4900 or 619/231-1058, or via e-mail at [email protected]. Lead plaintiff motions for the GSX Techedu securities class action lawsuit must be filed with the court no later than June 16, 2020.
GSX Techedu is a technology-driven education company that provides online K-12 after-school tutoring services in China. GSX Techedu also provides a variety of other tutoring courses and services, such as English courses for children in kindergarten, foreign language courses, English test preparation courses for students taking post-graduate entrance exams, professional courses for working adults preparing for professional qualification exams, personal interest courses, and offline business consulting courses. Additionally, GSX Techedu operates Weishi, an interactive learning platform on the popular Chinese digital application WeChat.
The GSX Techedu securities class action lawsuit alleges that throughout the Class Period, defendants made false and/or misleading statements and/or failed to disclose that: (i) GSX Techedu 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 GSX Techedu’s financial results; and (iii) as a result, GSX Techedu’s public statements were materially false and misleading at all relevant times.
On February 25, 2020, Grizzly Research LLC published a report highlighting multiple alleged issues with GSX Techedu’s business and financial operations. Specifically, the Grizzly Research report alleged, among other things, that GSX Techedu “has been drastically overstating its profitability in its US public filings, especially for 2018”; Grizzly Research “found multiple strong indications of past and current order ‘brushing,’” which is “essentially fak[ing] student enrollments to boost student count”; “many of GSX [Techedu]’s reported students d[id] not actually exist”; and “[w]hile [GSX Techedu] touts its high-quality teacher recruitment mechanism, [Grizzly Research] found a sign-up website that was not functional, multiple allegations of GSX [Techedu] hiring teachers right out of college with no prior experience, and fabricated teachers profiles.” Following publication of Grizzly Research’s report, the price of GSX Techedu American Depositary Shares (“ADSs”) declined to close at $44.09 per share on February 25, 2020.
Then, on April 14, 2020, Citron Research published a report highlighting additional alleged issues with GSX Techedu’s business and financial operations, including, among other things, that GSX Techedu’s “2019 revenue was overstated by 70%,” that “sales revenues [were] largely exaggerated,” and that GSX Techedu’s “filings [were] riddled with suspicious transactions.” Following publication of the Citron report, the price of GSX Techedu ADSs again fell, closing at $31.20 per share on April 14, 2020 – a total decline of more than 30% from the time the truth concerning GSX Techedu’s alleged fraud began to emerge.
Subsequently, on May 18, 2020, Muddy Waters Research released a report concluding that, “based on GSX [Techedu]’s own user and attendance data files” and corroborated by “a former GSX [Techedu] manager,” GSX Techedu “is a near-total fraud” and “at least ~70% of its users are fake.” In response, the price of GSX Techedu ADSs declined 16% from the close on the prior trading day before closing down 7.3%.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations, and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
Robbins Geller Rudman & Dowd LLP
J.C. Sanchez, 800-449-4900
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