In 2017, a child abuse scandal at RYB Education Inc. reduced its stock price by nearly 40%. The collapse cost the company's top ten institutional investors, including this company which is China's largest private equity fund, a combined US$52 million on paper. The losses might have been avoided if investors had taken into account some inherent weaknesses in RYB's business model which had a lack of background checks on teachers, and an increasing dependence of a network of lucrative franchise operations over which the parent company had little control. If more diligence work has been done by Hillhouse Capital, it could have avoided a two-day paper loss of US$4.4 million on the 430,000 RYB shares it holds.