Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

GSX Tech Edu is a Chinese private tutoring company that's listed on the New York Stock Exchange.

At its peak in January, it had a market cap of around $37 billion.

It has since fallen 98%, and is worth $370 million. So what went wrong? Well, back in July,

the Chinese government banned the private tuition industry from making profits, which is bad.

And that crashed the share prices of all the major tutoring companies.

You'll be glad to hear that not everyone lost money in the fall, though.

Back in March, executives at the company sold $19 million worth of their US listed shares through a shell company that was

holding shares for executives. They did this just three days after President Xi called tutoring

a stubborn malady that was putting too much pressure on Chinese children and their parents.

Today, that $19 million block of shares would only be worth around $4 million.

Larry Chen, the company's CEO, who does not appear to be linked to that actual $19 million

sale, publicly expressed confidence in the business at the time.

Additionally, he promised to buy $50 million worth of shares with his own money.

So far he does not appear to have bought any.

In an article published by the Financial Times earlier this week, the journalists found that

dozens of Chinese business executives managed

to sell stock in their US listed companies right as Beijing began its attacks on their

businesses.

It's probably somewhat reasonable to believe that executives within these companies knew

that the government in Beijing was unhappy with

them and that this would not be good for their company stock price.

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