TAL Education (NYSE: TAL) shares are trading lower after the company reported it discovered employee wrongdoing in its internal auditing process, which accounts for 3-4% of the company’s total estimated sales.
The company suspects that the employee in question had conspired with external vendors to wrongly inflate “Light Class” sales by forging contracts and other documentations.
TAL says the employee has been taken into custody by the local police.
Back in June 2018, Muddy Waters founder Carson Block called the company a fraud, saying at the time that TAL overstated its net income by more than 43% over the past two fiscal years.
“TAL combines the old school China fraud playbook of simply penciling in more favorable numbers with the more sophisticated asset parking fraud of Enron,” Block said in 2018.
TAL Education shares were trading down 9.53% at $50.50 in Wednesday’s pre-market session. The stock has a 52-week high of $59.76 and a 52-week low of $30.78.
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