UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release 98611 / September 28, 2023

ACCOUNTING AND AUDITING ENFORCEMENT

Release 4465/ September 28, 2023

ADMINISTRATIVE PROCEEDING

File No. 3-21754

In the Matter of

 TAL Education Group,

Respondent.

ORDER INSTITUTING CEASE-ANDDESIST PROCEEDINGS PURSUANT

TO SECTION 21C OF THE 

SECURITIES EXCHANGE ACT OF 1934,

MAKING FINDINGS, AND 

IMPOSING A CEASE-AND-DESIST 

ORDER

I.

The Securities and Exchange Commission (“Commission”) deems it appropriate that ceaseand-desist proceedings be, and hereby are, instituted pursuant to Section 21C of the Securities 

Exchange Act of 1934 (“Exchange Act”) against TAL Education Group (“TAL” or “Respondent”).

II.

In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the 

purpose of these proceedings and any other proceedings brought by or on behalf of the 

Commission, or to which the Commission is a party, and without admitting or denying the 

findings herein, except as to the Commission’s jurisdiction over it and the subject matter of these 

proceedings, which are admitted, Respondent consents to the entry of this Order Instituting 

Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, 

Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.

III.

On the basis of this Order and Respondent’s Offer, the Commission finds1 that:

1 The findings herein are made pursuant to Respondent’s Offer of Settlement and are not binding on any other 

person or entity in this or any other proceeding.
2 

SUMMARY

1. This matter concerns violations of the periodic reporting, books and records, and 

internal accounting controls provisions of the federal securities laws by TAL, a foreign private 

issuer headquartered in the People’s Republic of China (“PRC”), during the first three quarters of 

its 2020 fiscal year. 2

2. These violations stemmed from deceptive conduct by persons then working at the 

TAL subsidiary operating TAL’s “Light Class” Business Line, who, at the direction of a then 

mid-level manager, forged numerous “chops,” or seals, and created phony contracts with third 

parties, all for the purpose of artificially inflating the Light Class Business Line’s revenue. 

3. Due in part to TAL’s internal accounting controls with respect to its Light Class 

Business Line having been deficient during the period of the aforementioned conduct, that conduct

resulted in TAL’s consolidated reported net revenues and net income being misstated, during the 

first three quarters of its 2020 fiscal year, in the aggregate, by $86.1 million and $26.6 million, 

respectively. See Charts at Figs. 1 and 2, infra. This, in turn, necessitated the filing of a 

restatement by TAL.

3

 

RESPONDENT

4. TAL Education Group (“TAL”), incorporated in the Cayman Islands and having

its principal place of business in the PRC, has at all relevant times been in the business of 

providing smart learning solutions. TAL’s American Depository Shares have at all relevant 

times been registered with the Commission pursuant to Section 12(b) of the Exchange Act and 

traded on the New York Stock Exchange under the symbol “TAL.” Also at all relevant times, 

TAL has filed periodic and other reports, including on Forms 20-F and 6-K, with the 

Commission pursuant to Section 13(a) of the Exchange Act and related rules thereunder. 

FACTS

5. TAL launched its Light Class Business Line during its 2018 fiscal year through a 

consolidated subsidiary. The Light Class Business Line consisted of both business-to-consumer 

(“B2C”) tutoring products and business-to-business (“B2B”) revenue-sharing agreements 

between TAL and PRC-based telecom operators. 

6. TAL’s Light Class Business Line generated minimal revenues during TAL’s 2019 

fiscal year. During, however, the first three quarters of TAL’s 2020 fiscal year (which 

encompassed March 1, 2019 through November 30, 2019), revenue purportedly attributable to 

the Light Class Business Line increased dramatically, to purportedly account for between 3% 

and 4% of TAL’s total reported revenue. 

2 TAL’s 2020 fiscal year ran from March 1, 2019 to February 29, 2020.

3 See Annex to TAL’s Form 6-K filed April 28, 2020 (“Corrections to Certain Line Items of Previously Released 

Financial Statements for the First, Second and Third Quarters of Fiscal Year 2020”). 
3 

7. By late March 2020, TAL discovered that a purported Light Class Business Line 

B2B contract was a forgery and sought to verify if other contracts and documentation related to the 

Light Class Business Line were similarly forged. On April 7, 2020, TAL announced that it had 

discovered the forging of contracts and other documentation in its Light Class business, in 

violation of its business conduct and internal control policies, that it had reported the suspected 

responsible employee to local police, and that the police had taken that person into custody. TAL 

also terminated that employee. 

8. The subject former TAL employee, along with a former subordinate, were 

eventually convicted in a PRC court of, among other things, forging company seals for the 

purpose of artificially inflating the Light Class Business Line’s revenue. Both were sentenced to 

prison. 

9. The subject former TAL employee was, at the time of the offending conduct, a midlevel manager of TAL’s Light Class Business Line and, as noted above, the other person 

prosecuted criminally was his subordinate. In order to inflate the revenues attributable to the B2B 

component of the Light Class Business Line where they worked, these two former TAL employees 

forged, photoshopped, and fraudulently altered corporate seals and contracts purporting to have 

been executed by numerous PRC-based telecom operators. 

10. The aforementioned deceptive acts caused TAL’s reported net income and net 

revenues for the first three quarters of its 2020 fiscal year to be misstated, in the aggregate, by a 

total of $26.6 million and $86.1 million, respectively. These misstatements led to TAL’s filing the 

restatement, cited in n. 3 above, quantifying the impact of the deceptive acts upon TAL’s originally 

reported net income and net revenue figures for the three quarters, which are summarized here:

Fig. 1: TAL’s REPORTED NET INCOME (in thousands of USD)

Fiscal Quarter Reported Net 

(Loss)/Income

Restated Net 

(Loss)/Income

Difference % Under-/OverStatement

Q1 2020 (10,216) (19,068) (8,852) 46.42%

Q2 2020 (17,373) (26,500) (9,127) 34.44%

Q3 2020 25,035 16,420 (8,615) 52.46%

Fig. 2: TAL’s REPORTED NET REVENUES (in thousands of USD)

Fiscal Quarter Reported Net 

Revenues

Restated Net 

Revenues

Difference % Overstatement

Q1 2020 702,770 673,414 (29,356) 4.35%

Q2 2020 936,626 913,195 (23,431) 2.57%

Q3 2020 862,357 829,017 (33,340) 4.02%

11. TAL also acknowledged, in its Annual Report on Form 20-F for its 2020 fiscal 

year, that a material weakness it identified in its internal control over financial reporting relating to 
4 

its Light Class Business Line had contributed to its failure to prevent and detect the 

aforementioned overstatements earlier.

TAL’s Remedial Efforts

12. In determining to accept TAL’s Offer, the Commission considered remedial steps 

undertaken by TAL.

VIOLATIONS

13. As a result of the conduct described above, TAL violated Section 13(a) of the 

Exchange Act and Rules 12b-20 and 13a-16 thereunder, which require every issuer of a security 

registered pursuant to Section 12 of the Exchange Act to file with the Commission information, 

documents, reports and certifications as the Commission may require, and require that these reports 

contain such further material information as may be necessary to make the required statements not 

misleading.

14. As a result of the conduct described above, TAL also violated Section 13(b)(2)(A) 

of the Exchange Act, which requires reporting companies to make and keep books, records, and 

accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions 

of their assets.

15. Finally, as a result of the conduct described above, TAL violated Section 

13(b)(2)(B) of the Exchange Act, which requires all reporting companies to devise and maintain a 

system of internal accounting controls sufficient to provide reasonable assurances that transactions 

are recorded as necessary to permit preparation of financial statements in accordance with 

generally accepted accounting principles. 

IV.

In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent TAL’s Offer.

Accordingly, it is hereby ORDERED that: 

A. Pursuant to Section 21C of the Exchange Act, Respondent TAL shall cease and 

desist from committing or causing any violations and any future violations of Sections 13(a), 

13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules12b-20 and 13a-16 thereunder, and 

B. Respondent TAL shall, within 10 days of the entry of this Order, pay a civil money 

penalty in the amount of $1.25 million to the Securities and Exchange Commission for transfer to 

the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If 

timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. § 3717. 

C. Payment must be made in one of the following ways: 
5 

(1) Respondent may transmit payment electronically to the Commission, 

which will provide detailed ACH transfer/Fedwire instructions upon 

request;

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:

Enterprise Services Center

Accounts Receivable Branch

HQ Bldg., Room 181, AMZ-341

6500 South MacArthur Boulevard

Oklahoma City, OK 73169

Payments by check or money order must be accompanied by a cover letter identifying TAL as a 

Respondent in these proceedings, and the file number of these proceedings; a copy of the cover 

letter and check or money order must be sent to Melissa Hodgman, Associate Director, Division of 

Enforcement, Securities and Exchange Commission, 100 F St., NE, Washington, DC 20549-5553.

D. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes. To 

preserve the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor 

Action, it shall not argue that it is entitled to, nor shall it benefit by, offset or reduction of any 

award of compensatory damages by the amount of any part of Respondent’s payment of a civil 

penalty in this action (“Penalty Offset”). If the court in any Related Investor Action grants such a 

Penalty Offset, Respondent agrees that it shall, within 30 days after entry of a final order granting 

the Penalty Offset, notify the Commission’s counsel in this action and pay the amount of the 

Penalty Offset to the Securities and Exchange Commission. Such a payment shall not be deemed 

an additional civil penalty and shall not be deemed to change the amount of the civil penalty 

imposed in this proceeding. For purposes of this paragraph, a “Related Investor Action” means a 

private damages action brought against Respondent by or on behalf of one or more investors based 

on substantially the same facts as alleged in the Order instituted by the Commission in this 

proceeding.

By the Commission.

 Vanessa A. Countryman

Secretary