Shareholders sue RYB for info disclosure misconduct

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After the child abuse scandal and alleged sexual assaults on children, shareholders of New York-listed RYB Education are filing a class lawsuit against the company. They complain that RYB failed to disclose previous child abuse cases in some of its kindergartens years ago, misleading them to believe that the company is running normally.

RYB case would not go it alone. While, in China, some teachers have been suspended and a police investigation is under way, the investors are entitled to hire lawyers to fight for the facts and losses in the US.

CGTN Photo

Junbo Hao, lawyer from the Hao Law Firm on behalf of some shareholders, told CGTN Tuesday that most investors, when they decided to invest in RYB, could not imagine such bad thing could happen in a kindergarten. And what makes shareholders angry most is that case in Beijing is not the first scandal involving RYB.

In 2015, two teachers in another kindergarten in Siping, northeast China’s Jilin Province, were sentenced to two years and ten months in prison for hurting children with needles.

A police investigation may not be the only one RYB faces. But none of previous scandals has been exposed.

In that case, investors complain that RYB failed to disclose previous child abuse cases in some of its kindergartens years ago, misleading them to believe that the company is running normally, based on Hao’s word.

"A lot people care about children, maybe they don’t [even] care about money or stock," Hao noted.

CGTN photo

Meanwhile, Hao noted that the case would have negative influence on Chinese companies who want to go public in NYSE in the future. RYB shaped a bad image for Chinese companies and "US lawyers and US investors really care about whatever you do, especially bad things," Hao stressed.

Moreover, for other Chinese companies who have already listed in the NYSE, this case could be a "big lesson".

The legal systems are different in China and the US. Hao said they are still seeking for more shareholders of RYB suffering large losses.

VCG Photo

RYB made its market debut on the New York Stock Exchange (NYSE) in September, raising 102 million US dollars with an offer of 5.5 million shares at 18.5 US dollars apiece. It was the first Chinese early childhood education provider to list in the US.

It posted net profits of 4.9 million US dollars in the first half of this year, up nearly 20 percent from 2016. Business revenues, mainly from tuition and franchise fees, surged 30 percent year on year to 64.3 million US dollars for the first six months, according to an exchange filing.

RYB’s share price tumbled more than 40 percent in pre-market trading and closed with a 38.41 percent drop, almost wiping out most of the 44 percent rise in the stock since its IPO in September.