17 Education & Technology Group Inc. (YQ) Misled Investors Regarding the Viability of its Long-Term Business Prospects
A shareholder filed a class action on behalf of all persons or entities that purchased or otherwise acquired 17 Education & Technology Group Inc. (NASDAQ: YQ) securities in connection with the Company’s December 2020 initial public offering (“IPO”), for violations of the Securities Act of 1933. 17EdTech purports to be a leading education technology company that provides K-12 education services in the People’s Republic of China (“PRC”).
According to the complaint, defendants held the Company’s IPO on December 4, 2020, issuing approximately 27,400,000 American Depository Shares (“ADSs”) at $10.50 per ADS. Just a year later, 17EdTech ceased its core offering of tutoring services for students K-12. PRC authorities have been targeting private education and tutoring companies since at least February 2019, when Chinese authorities publicly proposed a 2018-2022 plan for modernizing Chinese education, which included restricting foreign investment in education and reducing the burden of education and training. On July 23, 2021, Chinese authorities formally revealed to the public continued regulations banning after-school tutoring companies that teach the school curriculum from making profits, raising capital, or going public.
The offering documents supporting 17EdTech’s IPO failed to disclose the Company’s K-12 tutoring services would be shut down in a year’s time, effectively curtailing and/or ending 17EdTech’s core business. As the Company disclosed the impact of the ban on after-school tutoring companies, 17EdTech’s stock spiraled downwards. Since the IPO, as it disclosed material adverse facts that it had omitted from the offering documents, 17EdTech’s stock has declined approximately 85%.
Next Steps: If you acquired shares of 17EdTech pursuant to the Company’s IPO, you have until September 19, 2022, to ask the court to appoint you lead plaintiff for the class. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
