New Oriental Gains After Refuting Muddy Waters’ Charges
New Oriental Education & Technology Group Inc. (EDU) rose the most since September 2006, halting a two- day, 57 percent slump, after contesting allegations by short seller Muddy Waters LLC about the company’s accounting practices.
The American depositary receipts of New Oriental jumped 30 percent to $12.35 by 10:39 a.m. in New York, after sinking to $9.50 yesterday. Today’s advance snapped a nine-day retreat.
New Oriental, China’s largest private education services provider, said it owned 664 schools and learning centers by the end of May, and Muddy Waters’ allegation that a large part of them are franchised outlets is wrong, according to a statement today. The Beijing-based company has never counted the 21 cooperation facilities it has and their student enrollments as its own, it said.
In a report yesterday, Muddy Waters questioned the ownership of some of New Oriental’s schools and the consolidation of their financial statements with the parent company.
New Oriental said on July 17 that the Securities and Exchange Commission issued an order of investigation to review the consolidated earnings of its subsidiaries.
Zachery Kouwe, an external media relations manager for Muddy Waters, didn’t immediately return calls and an e-mail message by Bloomberg seeking comment on New Oriental’s statement.
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