Private Chinese Chinese education company, New Oriental Education (EDU), was attacked by short-seller Muddy Waters in July 2012 alleging fraud. The company immediately set up an independent committee to investigate the claims. In November, the committee reported that it found no evidence to support the claims. However, the company did have to settle a class action for US$4.5m relating to false and misleading statements without any admission of wrongdoing. Deloitte signed off on EDU's financials and so the claims were unproven. Our A&G Screen suggested that EDU's financials had some traits in line with past frauds but we think this likely related to retention of cash and profits within the VIEs, as opposed to faking profits. 

Last updated November 2021

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