According to a press release dated October 28, 2010, the complaint charges Washington Post and certain of its officers and executives with violations of the Exchange Act. Washington Post is a diversified education and media company. The Company’s Kaplan Inc. (“Kaplan”) subsidiary is a for-profit educational institution that provides an extensive range of educational and related services worldwide for students and professionals. Kaplan operates through four segments: Kaplan Higher Education, Kaplan Test Preparation, Kaplan International and Kaplan Ventures. Kaplan Higher Education, through Kaplan University and its Kaplan Higher Education Campuses, provides a wide array of certificate, diploma and degree programs – on campus and online – designed to meet the needs of students seeking to advance their education and career goals.
Specifically, the complaint alleges that throughout the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. Specifically, defendants failed to disclose that: (i) the Company had engaged in improper and deceptive recruiting and financial aid lending practices and, due to the government’s scrutiny into the for-profit education sector, the Company would be unable to continue these practices in the future; (ii) the Company failed to maintain proper internal controls; (iii) many of the Company’s programs were in jeopardy of losing their eligibility for federal financial aid; and (iv) as a result of the foregoing, defendants’ statements regarding the Company’s financial performance and expected earnings were false and misleading and lacked a reasonable basis when made.
On August 13, 2010, after the market closed, the U.S. Department of Education released data on federal student-loan repayment rates at the nation’s colleges and universities. The data showed that repayment rates were 54% at public colleges and 56% at private non-profit institutions, compared to just 36% at for-profit colleges. Specifically, the data showed that the repayment rate at Washington Post’s Kaplan University was just 27%. On this news, the price of Washington Post stock dropped 8.10%, or $27.83 per share, from a closing price of $343.48 per share on August 13, 2010 to a closing price of $315.65 per share on August 16, 2010, the following trading day, on a 421% increase in trading volume.
On April 21, 2011, the Court in the Federal District of Colombia issued an order making its selection of lead plaintiff and lead counsel. On June 24, 2011, the plaintiff filed a Consolidated Class Action Complaint.
On December 23, 2011, the Defendants’ Motion to Dismiss was granted by the Court, thereby dismissing the case with prejudice.
On December 23, 2011, the Defendants’ Motion to Dismiss was granted and the case was dismissed with prejudice. Subsequently, on December 28, 2012, a Judgment was entered for the defendants dismissing this action with prejudice.
On March 13, 2012, the plaintiff’s motion to alter the Court’s December 23, 2011, dismissal of the complaint and its December 28, 2011, judgment in favor of defendants was granted. Additionally, the plaintiff’s motion to amend was also granted, which led to the plaintiff filing an amended complaint (please refer to 1/25/2012, Proposed Amended Consolidated Complaint).
On March 19, 2013, The Court issued an order dismissing the case with prejudice. The Court reasoned that this is Plaintiff’s second unsuccessful attempt to survive a motion to dismiss, and found that dismissal with prejudice is appropriate.