NEW YORK, July 27, 2012 /PRNewswire/ --Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential securities fraud at New Oriental Education & Technology Group ("New Oriental" or the "Company") (NYSE: EDU).
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The investigation focuses on whether the New Oriental and its executives violated federal securities laws by failing to disclose that: (1) the Company improperly consolidated the earnings of a variable interest entity into its financial statements; (2) a significant number of the Company's schools and learning centers were not company-owned, but were instead operated by independent franchisees; (3) upfront franchise and other fees had artificially inflated the Company's cash balances; and (5) the Company lacked adequate internal and financial controls and as a result of the foregoing, New Oriental's financial statements were materially false and misleading.
On July 17, 2012, the Company disclosed that the Securities and Exchange Commission "had issued a formal order of investigation" as to whether the Company appropriately consolidated the earnings of Beijing New Oriental Education & Technology (Group) Co., Ltd., a variable interest entity of the Company, and its wholly-owned subsidiaries. On this news, New Oriental's share price plummeted by $7.64 or more than 34%, to close at $14.62 on July 17, 2012.
On July 18, 2012, independent securities research firm Muddy Waters, LLC issued an analyst report predicting that the Company "will have a significant restatement, and that its auditor will resign." On this news, New Oriental's share price declined by an additional $5.12 or more than 35%, to close at $9.50 on July 18, 2012.
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Take Action
If you purchased New Oriental securities between July 21, 2009 and July 17, 2012 and would like to discuss your legal rights, visit www.faruqilaw.com/EDU. You can also contact us by calling Richard Gonnello or Francis McConville toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to rgonnello@faruqilaw.com or fmcconville@faruqilaw.com. Faruqi & Faruqi, LLP also encourages anyone with information regarding New Oriental's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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FARUQI & FARUQI, LLP
369 Lexington Avenue, 10th Floor
New York, NY 10017
Attn: Richard Gonnello, Esq.
rgonnello@faruqilaw.com
Francis McConville, Esq.
fmcconville@faruqilaw.com
Telephone: (877) 247-4292 or (212) 983-9330
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