SAN FRANCISCO, April 20, 2020 /PRNewswire/ -- Hagens Berman urges investors in GSX Techedu Inc. (NYSE: GSX) who have suffered significant losses to submit their losses now. A securities fraud class action has been filed and certain investors may have valuable claims.
GSX Techedu (GSX) Securities Class Action:
The Complaint alleges that throughout the Class Period, Defendants overstated GSX's profitability, revenue, student enrollment figures, teacher qualifications, and teacher selection process.
Investors began to learn the truth, according to the Complaint, beginning on Feb. 25, 2020 when Grizzly Research published a scathing report, "Brushed Student Counts and Cooked Books: Why We Believe GSX Techedu is the Worst Publicly Traded Education Company." According to the report: (1) the company "has been drastically overstating its profitability in its US public filings, especially for 2018;" (2) Grizzly "found multiple strong indications of past and current order 'brushing'" which are "fake student enrollments to boost student count;" (3) "many of GSX's reported students do not actually exist;" and, (4) "[w]hile [GSX] touts its high-quality teacher recruitment mechanism, [Grizzly] found a website that was not functional, multiple allegations of GSX hiring teachers right out of college, with no prior experience, and fabricated teachers profiles."
Then, on Apr. 14, 2020, Citron Research published its own cutting report, "GSX Techedu Inc. – The Most Blatant Chinese Stock Fraud Since 2011," accusing GSX of fabricating up to 70% of its revenues. According to the report, GSX's Chinese official government financials and SEC financials are irreconcilable and show a 75% overstatement of net profits for FY 2017 – 2018 alone.
These revelations have driven the price of GSX ADSs sharply lower.
"We're focused on investors' losses and proving GSX and its senior management intentionally mislead investors," said Reed Kathrein, the Hagens Berman partner leading the investigation.
Whistleblowers: Persons with non-public information regarding GSX should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email [email protected].
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Reed Kathrein, 844-916-0895
SOURCE Hagens Berman Sobol Shapiro LLP