New York law firms probe scandal-hit early education company

By Zhao Yusha Source:Global Times Published: 2017/11/26 20:58:40

RYB may have violated US securities regulations: lawyer

At least two New York law firms have started investigations into RYB Education, a provider of pre-school education in China, after allegations of child abuse at one of its Beijing kindergartens sent shock waves through Chinese society.

Rosen Law Firm and Liu, Zheng, Chen & Hoffman LLP are among the first to have announced investigations into the scandal, according to news site

Rosen Law Firm published a press release on its website saying that it is investigating "potential securities claims on behalf of purchasers of the securities of RYB Education, Inc. (NYSE: RYB) resulting from allegations that RYB Education may have issued materially misleading business information to the investing public."

The Beijing based RYB Education group, founded in 1998, was listed on the New York Stock Exchange in September 2017, the first Chinese early education provider to do so. It has more than 1,300 day-care centers and nearly 500 kindergartens in 300 cities in China, according to its website.

RYB has been engulfed in a storm after a slew of media reports on Thursday alleged multiple counts of child abuse at its RYB kindergarten in Beijing's Chaoyang district. A number of parents had claimed their children had puncture marks from needles and had been given unknown types of pills.

After the media exposure, shares in RYB fell $10.28 per share or over 38 percent from its previous closing price to close at $16.45 per share on Friday.

The investigation is to confirm whether the company has made misleading or dishonest claims in its disclosures ahead of its listing in the US, Zhang Xinnian, a Beijing-based lawyer, told the Global Times.

Zhang said RYB could be in for a large fine if any violations of US securities regulations are uncovered.

Beijing police announced Saturday on social media they had detained a 22-year-old female teacher surnamed Liu for suspected child abuse, and Chaoyang district authorities said the principal of the kindergarten has been fired. Investigations are ongoing, police said.

Separately, a 31-year-old woman, also surnamed Liu, has been detained for allegedly spreading rumors through WeChat about a military regiment collectively involved in molesting children in the kindergarten, Beijing police said in the announcement.

Liu "fabricated and spread rumors, which have caused a pernicious social influence," the statement said.

Public discussion of the case is still intense, especially as four employees of an RYB kindergarten were charged with similar acts of child abuse in 2015 at one of its childcare centers in Siping, Northeast China's Jilin Province.

The four, who had also pricked the children with needles and pinched them, were sentenced to up to two years and 10 months in jail, Beijing-based newspaper the Mirror reported on Sunday.

Some of the children involved in Siping's case are still suffering trauma from the abuse and two are still receiving psychological counseling; others refuse to attend other kindergartens, and two families even moved out of Siping, said Chen Yuwei, a lawyer who represented the parents of one of the children.

Every child received compensation of 30,000 yuan ($4,545), Chen said.

Newspaper headline: Day-care firm faces NY legal probe

Posted in: SOCIETY,LAW

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