Meten EdTechX Education Group

Kurta Law is investigating broker recommendations of Meten EdTech Education Group (NASDAQ: METX). These investments came with a high risk for losses, risks that brokers should have disclosed. Securities rules and regulations have an obligation to only recommend investments that suit their investor’s risk tolerance. Unsuitable investment recommendations violate FINRA Rule 2111 and Regulation Best Interest (Reg BI).  

If your broker recommended an overly risky investment, you may have a case for an investment fraud attorney. Contact Kurta Law for a free case evaluation. Call (877) 600-0098 or email info@kurtalawfirm.com.  

About the Offering 

The prospectus dated May 24, 2021, announced that Meten EdTechX Education Group would be offering 40,000,000 ordinary shares for $1.00 per share.  

Meten Holding Group received a notification from NASDAQ regarding its minimum bid price deficiency. Stocks that trade on the NASDAQ exchange are required to maintain a $1.00 minimum bid price.  

What is Meten EdTechX Education Group Ltd?  

Meten EdTechX offers English Learning Training (ELT) in China. Meten EdTechX Education Group caters to different age groups. It offers in-person lessons as well as online training.  

Risks Associated with Meten EdTechX Education Group  

The following risks were clearly disclosed in the prospectus. Brokers either knew or should have known about these risks.  

Difficulty Selling Ordinary Shares 

The prospectus disclosed that an active trading market for these shares might not be sustainable.  

Securities Analysts  

Meten EdTechX Education Group’s future market for ordinary shares would depend on coverage by securities analysts. Without positive coverage, or without any coverage, the trading prices for the shares would be negatively impacted.  

Exempted Cayman Islands Company  

Meten EdTechX Education Group is an exempt company incorporated in the Cayman Islands with limited liability. As such, it is permitted to adopt home country practices that differ from NASDAQ requirements. These practices might afford less protection to shareholders. 

Immediate Dilution  

Investors who purchased shares of MetenEdTechX Education Group would have experienced an immediate dilution of the value of their shares. At the time of the offering, the tangible book value of the company was negative $58.53 million, or negative $1.03 per ordinary share. The difference between the offering price and the tangible value would result in an immediate dilution.  

Aegis Capital Corp. Underwriting    

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

Kurta Law Can Help  

Contact Kurta Law today for a free case evaluation – keep in mind that you have a limited time to file a claim. Our attorneys do not collect a fee unless we win your case. If you have any questions, call (877) 600-0098 or email info@kurtalawfirm.com.