This week, Oregon Attorney General John Groger and Treasurer Ted Wheeler announced that the state is suing University of Phoenix’s parent company, Apollo Group Inc. of Arizona, and several of its executives for securities fraud. The state officials claim that the plaintiffs misled investors in the firm’s financial statements about the for-profit college’s revenue.
The alleged misconduct is said to involve the school’s revenue between 2007 and 2010. Because of the misrepresentation, the Oregon Public Employee Retirement Fund lost approximately $10 million. Oregon’s securities lawsuit, which joins a class action case while seeking lead plaintiff status, accuses the defendants of violating securities law with materially false and misleading statements that misrepresented or did not disclose information that could have helped investors determine their investments’ risk levels.
The state contends that Oregonians seeking higher education were also injured by the Apollo Group’s financial practices. For example, the company is accused of not taking the proper steps when handling federal student loans. The firm also is accused of improperly dealing with canceled loans, causing students to be held financially responsible for classes that they didn’t take.
After the company’s alleged misconduct was disclosed in an October 2009 filing and the SEC investigation became publicly known, shares of Apollo dropped 17.7% in one day. With the pre-disclosure price sinking from $72.97/share to $60.06/share, almost $2 billion in market capitalization was wiped out.
Apollo’s stock price continued to drop this year, following calls for greater oversight over the for-profit college industry. Apollo’s improper business practices were also brought to light during Congressional hearings. Recently, a Senate probe and a Government Accountability Office report revealed that Apollo also committed fraud when marketing its services to prospective students. Apollo shares were trading at $38.94 on August 13, 2010.
Related Web Resources:
Oregon Sues University of Phoenix Firm for Fraud, KTVZ, October 18, 2010
State Of Oregon Joins Class-Action Suit Against Apollo Group, The Wall Street Journal, October 18, 2010
Our securities fraud lawyers represent institutional investors throughout the US.