Business
12:39, 25-Nov-2017
RYB share price plunges over child abuse claims
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US-listed RYB Education, a China-based childhood education service provider, saw its share price plunge on Friday after shocking child abuse claims at a kindergarten run by the company.
The 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.
The company announced a share repurchase program on Friday with an aggregate value of up to 50 million US dollars during the next 12 months, according to a statement on its website released on Friday before trading opened.
Cao Chimin (left) and Shi Yanlai (center), founders of RYB, at the New York Stock Exchange for RYB’s IPO on September 27 /VCG Photo
Cao Chimin (left) and Shi Yanlai (center), founders of RYB, at the New York Stock Exchange for RYB’s IPO on September 27 /VCG Photo
Authorities in China are investigating allegations that some teachers and staff at a kindergarten in Beijing run by RYB had abused children who were pierced by needles, given unidentified pills and even reportedly sexually molested. The case has fueled anger in public and online.
The worst scenario would be the child abuse case is “isolated wrongdoings by our staff at the facility,” RYB’s CFO Wei Ping said in a conference call for investors on Friday, adding that the company is working with police and education authorities.
However, the case in Beijing is not the first scandal RYB has had. In 2015, two teachers of another kindergarten in Siping, northeastern China’s Jilin Province, were sentenced two-year-and-ten-month prison terms for hurting children with needles.
An investigation by police may not be the only one RYB has to deal with.
Rosen Law Firm, a global investor rights law firm, announced on Friday that it is investigating claims on behalf of purchasers of the securities of RYB resulting from allegations that the company may have issued materially misleading business information to the investing public.
According to a statement on Rosen’s website, the law firm is preparing a class action lawsuit to recover losses suffered by RYB investors.