GSX Techedu (NYSE: GSX) is under scrutiny from the Securities and Exchange Commission, which has opened an investigation into the Chinese online education specialist following allegations it was inflating sales. The case is similar to that of one-time market darling Luckin Coffee, the Chinese Starbucks wannabe, which was exposed for having similarly fudged sales numbers.
The Wall Street Journal reports the SEC probe follows the regulatory agency receiving several complaints from short-sellers, including Andrew Left at Citron Research and Carson Block of Muddy Waters Research, who claim GSX is publishing false sales and operational data, and that most of its customers are fake.
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