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China's RYB Education hit with class-action suit over abuse allegations

Beijing-based early childhood education provider RYB Education Inc. is facing a class-action lawsuit following reports about the company's failure to prevent sexual abuse at its schools, according to a Dec. 18 release.

The Law Offices of Vincent Wong filed the lawsuit in the U.S. District Court for the Southern District of New York on behalf of investors who purchased RYB American depositary shares between Sept. 27 and Nov. 22.

On Nov. 24, media outlets reported about parents accusing RYB Education of drugging and abusing their children. The company issued a press release the same day stating that a police investigation was being conducted. On Nov. 27, RYB Education said one teacher at the RYB-operated kindergarten has been detained as a criminal suspect for maltreatment of children in the facility. The company added that it would dismiss the accused teacher, effective immediately.

According to the complaint, the company during the class period did not disclose that it failed to establish safety policies to prevent sexual abuse from occurring at its schools and failed to address problems within its system, which exposed children to harm. As a result, RYB securities traded at artificially inflated prices during the class period and class members suffered substantial losses.