First High-School Education Group Co., Ltd.
|Company Name||First High-School Education Group Co., Ltd.|
|Class Period||March 01, 2021 to May 11, 2022|
|Lead Plaintiff Motion Deadline||July 11, 2022|
In March 2021, FHS conducted its IPO, selling 7.5 million ADSs at $10 per ADS.
On May 12, 2021, media reported that the impending crackdown by the Chinese government on the online education industry would be more drastic than previously reported. Anticipated regulations included banning on-campus tutoring classes and weekend tutoring, as well as industry-wide fee limitations.
Then, on July 23, 2021, China unveiled a sweeping overhaul of its education sector, banning for-profit teaching and tutoring companies.
On July 26, 2021, FHS issued a press release stating that it would “follow the spirit of the Opinion and comply with all relevant rules and regulations in providing high school education services.”
Then, on September 28, 2021, FHS announced its financial results for the first half of 2021, revealing a 7.7% decrease in year-over-year revenue.
Then, on April 5, 2022, FHS issued a press release announcing that the Company had received a letter from the NYSE stating that the Company was in non-compliance with the NYSE’s listing requirements because its total market capitalization and stockholders’ equity had fallen below compliance standards.
Then, on May 3, 2022, FHS disclosed that it would not be able to timely file its annual report on Form NT 20-F.
By May 10, 2022, FHS ADSs closed below $1 per ADS, over 90% below the IPO price, thereby injuring investors.
The complaint filed in this class action alleges that Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that the new rules, regulations, and policies to be implemented by the Chinese government following the Two Sessions parliamentary meetings were far more severe than represented to investors and posed a material adverse threat to First High-School Education and its business; (2) that contemplated Chinese regulations and rules regarding private education were leading to a slowdown of government approval to open new educational facilities which would have a negative effect on First High-School Education's enrollment and growth; and (3) as a result, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
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