According to the law firm press release, the Complaint alleges that Defendants violated the federal securities laws by issuing a series of materially misleading statements and omissions about K12 -- one of the largest private education management organizations in the United States -- regarding its student enrollment and revenue growth prospects for fiscal 2014, including compliance with state regulations governing enrollment. During the Class Period, the Company publicly endorsed analysts' consensus estimates for full fiscal 2014 financial guidance and emphasized that K12 was "on track to have one of the best business development years" in the Company's history, which was supposed to "drive even higher growth for fiscal 2014" than in fiscal 2013. Further, the Complaint alleges that Defendants falsely touted K12's "serious" attention to regulatory compliance. These and similar misrepresentations and omissions were made on the Company's quarterly earnings calls and at industry conferences.
On October 8, 2013, after the market closed, the Company alerted investors to the fact that, contrary to Defendants' public representations during the Class Period, K12's growth prospects were limited and impeded by the Company's failure to timely invest in promotional efforts to enroll new students in fiscal 2014. As the Company disclosed at the end of the Class Period, K12's "own promotional program started later than it should have, and drove more applications later in the summer" when it was too late to convert them into student enrollments. In addition, K12's growth prospects were hampered by the Company's failure to consider and adhere to legal compliance requirements affecting student enrollment in fiscal 2014. As the Company further acknowledged, K12 failed to "appropriately" consider increased compliance requirements that were applicable in certain states in the fiscal 2014 enrollment season. On October 8, 2014, K12 filed a Form 8-K with the SEC, which included a press release revealing that K12's actual fiscal 2014 revenue guidance was $905-$925 million -- not the $986.8 million figure endorsed weeks earlier -- because 2014 enrollments were below the levels that investors were told to expect due to critical operational and performance deficiencies at K12's enrollment centers. In response to this disclosure, K12 stock fell significantly, by more than 38%, falling from a closing price of $28.59 on October 8, 2013 to a closing price of $17.60 on October 9, 2013.
On April 24, 2014, the Court issued an Order consolidating actions, appointing lead plaintiff, and approving the selection of lead counsel. On May 23, lead plaintiff filed an amended complaint.
On November 5, 2014, the Court issued an Order granting defendants' Motion to Dismiss. This case was closed.