Headquarter building of New Oriental Education Group in Beijing. [File Photo]

US investors will sue New Oriental and some of its senior executives for alleged violations of federal securities laws, according to an announcement on a US law firm's website.

The investors, who purchased American Depository Shares from the firm between July 21, 2009 and July 17, 2012 (known as the "class action period"), sued New Oriental Education Group Inc in the United States District Court for the Central District of California, China Securities Journal reported Wednesday.

The prosecution alleges that during the class action period, New Oriental Group made false or misleading statements and failed to disclose the facts of its business, operations and prospects.

After short seller Muddy Waters LLC, a small China-based research firm that focuses on uncovering fraudulent China stocks announced that financial statements in New Oriental Group units were fraudulent, the group sank to a five-year low.

Glancy Binkow & Goldberg LLP investigated accusations of New Oriental's variable interest entities and found that some of the details were consistent with the report released by Muddy Waters.

In response to Muddy Waters' questions about the ownership of some of New Oriental's schools and the consolidation of their financial statements with the parent company, Yu said that those labeled as "New Oriental" are all regular chains of New Oriental Education & Technology Group, while 19 franchisee schools are authorized by New Oriental's sub-brand and 2 are New Oriental Stars.

The 21 schools only have the authority to use the brands Pop Kids Education and New Oriental Stars, and not "New Oriental".

On July 20, New Oriental Education issued two reports, announcing that five senior executives would buy back stocks on the open market over the next three months. Meanwhile, the board of directors will establish an ad hoc committee to investigate the accusations from Muddy Waters.

New Oriental Education is a leading private education company in China, providing language training courses in English, German, Japanese and other foreign languages. Founded in 1993, it has had over 13 million student enrollments and a network of 55 schools.