According to a press release dated August 16, 2010, in particular, 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 13% and 15% for 2010, these statements were false because: (1) defendants had propped up the Company's results by fraudulently inducing students to enroll in LINC'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) LINC did not maintain adequate systems of internal operational or financial controls, which would have permitted LINC'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 LINC after the United States General Accounting Office ("GAO") issued a report that concluded that for-profit educational institutions like LINC 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 $4.30, or 20% in a single trading day, on unusually high trading volume.
By the Order signed by Judge Stanley R. Chesler on November 24, 2001, related actions 10-4926 and 10-4160 are consolidated for all purposes under Master File No. 10cv4160. Richard Arons is appointed as Lead Plaintiff and Bernstein Liebhard LLP is approved as Lead Counsel. A Consolidated Amended Class Action Complaint was filed on February 14, 2011.
According to the Order entered on September 6, 2011, the defendants' motion to dismiss the Consolidated Amended Class Action Complaint is granted, and it is further ordered that the Consolidated Amended Class Action Complaint be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6).