According to a press release dated August 13, 2010, the Complaint alleges that despite extensive positive statements by defendants in press releases and SEC filings during the Class Period regarding the Company's operational performance and future growth projections, including predictable revenue growth of between 36% and 39% for 2010, these statements were false because: (1) defendants had propped up the Company's results by fraudulently inducing students to enroll in APEI's scholastic and educational programs and engaged in other manipulative recruiting tactics; (2) defendants had materially overstated the Company's growth prospects by failing to properly disclose that defendants had engaged in illicit and improper recruiting activities, which also had the effect of artificially inflating the Company's reported results and future growth prospects; and (3) APEI did not maintain adequate systems of internal operational or financial controls, which would have permitted APEI's reported operational statements and foreseeable growth prospects to be true, accurate or reliable.
It was only on August 5, 2010 that investors finally began to learn the truth about APEI after the United States General Accounting Office ("GAO") issued a report that concluded that for-profit educational institutions like APEI had engaged in an illegal and fraudulent course of action designed to recruit students and over-charge the federal government for the cost of such education. Following these disclosures, shares of the Company collapsed -- falling over $12.00, or almost 30% in the single trading day as this news reached the market.
On November 11, 2010, the Court issued an Order Appointing Lead Plaintiff and Approving Lead Plaintiff's Selection of Lead and Liaison Counsel in this matter.
On January 25, 2010, a Consolidated Amended Complaint For Violation Of The Federal Securities Laws was filed by the lead plaintiffs against the defendants.