MEMORANDUM OPINION AND ORDER This case is a securities action brought on behalf of a class of investors who purchased or acquired American Depository Shares (“ADSs”) of First High-School Education Group Co. Ltd., (“FHS” or the “Company”) traceable to a registration statement and prospectus (together, the “Registration Statement”) issued in connection with the Company’s March 10, 2021 initial public offering (“IPO” or the “Offering”). The lead plaintiff, Dagan Investments LLC, brought claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933 (the “Securities Act”). 15 U.S.C. §§77k, 77l(a)(2), 77o. The defendants now move to dismiss the Second Amended Complaint, ECF No. 52 (“SAC”), pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, the motion to dismiss is granted. I. Unless otherwise noted, the following facts are taken from the Second Amended Complaint and are accepted as true for the purposes of deciding this motion. FHS operates private high schools and middle schools in Western China and provides for-profit tutoring services. SAC 19. By December 31, 2019, the Company had become the “largest operator of private high schools in Western China and the third largest operator in all of China in terms of student enrollment.” Id. 42. On January 13, 2021, FHS filed a draft registration statement on Form F-1 with the Securities and Exchange Commission (“SEC”) in anticipation of its IPO. Id. 53. The draft was revised several times in response to certain inquiries from the SEC. Id. 70. Meanwhile, beginning March 4, 2021, the Chinese government held its first 2021 “Two Sessions” meeting.1 Id.
4, 58. At the meeting, Chinese government officials “discussed [and] proposed…stringent regulations governing the educational industry.” Id. 62. Notably, President Xi Jinping “sp[oke] out on his contempt for the for-profit education industry, and call[ed] for a new wave of ‘comprehensive reforms’ to clamp down on the industry’s practices….” Id. 5. Between March 6 and March 9, 2021, various Chinese news outlets published articles highlighting the government’s discussions of an “impending crack-down on the for-profit private education and tutoring industry….” Id.
