According to a press release dated July 29, 2011, the complaint charges the Company and certain of its officers and directors with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.
The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and prospects. Specifically, defendants misrepresented and/or failed to disclose the following adverse facts: (i) that the Company’s revenues and earnings were negatively impacted by increased competition in its marketplace, including from companies with lower cost offerings; (ii) that a number of significant operational problems existed at the Company that negatively impacted its business; (iii) that the Company had shifted its focus, and a significant amount of resources, away from its core higher education readiness and Penn Foster core businesses in pursuit of unproven projects to the detriment of its business, financial performance and prospects; (iv) that contrary to the Company’s public statements, the Company was not executing well on its turn-around plan; (v) that the Company had encountered significant problems in the higher education readiness business due to a product mix shift and increased competition; and (vi) that, as a result of the foregoing, defendants’ positive statements about the Company were lacking in a reasonable basis of fact and were materially false and misleading when made.
On March 9, 2011, the Company announced that its President and Chief Executive Officer resigned. That same day, the Company issued a press release announcing its financial results for the fourth quarter and full year 2010. For the full year 2010, loss from continuing operations was $50.4 million, compared to a loss of $13.9 million in 2009.
Following these announcements, the price of shares declined 37.80% to $0.51 per share on March 10, 2011, and then declined another 23.53% on March 11, 2011, to close at $0.39 per share on very heavy volume.
On September 28, 2011, the Court entered an electronic order appointing the Lead Plaintiff and approving of Lead Counsel.
On November 7, 2011, the Lead Plaintiff filed an Amended Complaint.
On March 6, 2012, the Court granted the Defendants' motions to dismiss and dismissed the case with prejudice. The case is now closed.