According to the law firm press release, the Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (1) EDMC was overstating revenue by not properly increasing its bad debt reserve upon student withdrawals; (2) EDMC was overstating goodwill; (3) EDMC manipulated federal student loan and grant programs in order to appear to be in compliance with new federal regulations enacted in June 2011; (4) EDMC's predatory and deceptive recruiting and enrollment practices violated federal regulations enacted beginning in June 2011 and (5) as a result of the foregoing, EDMC's public statements were materially false and misleading at all relevant times.
On July 30, 2012, Senator Tom Harkin, chairman of the Health, Education, Labor and Pensions Committee (the "HELP Committee") completed a two-year investigation of the for-profit college industry, and issued a report (the, "Harkin Report") filled with troubling statistics and findings regarding the for profit college industry, and specifically about EDMC. After the Harkin Report was published, the Company's shares fell almost 8% or $0.32, to close at $3.77 on July 30, 2012.
On June 20, 2013, after the close of trading, the Company issued a press release and filed a Form 8-K with the SEC, announcing the termination of the President of The Art Institutes. On this news, the Company's shares fell over 10% or $0.71, to close at $6.22 on June 21, 2013. On the next trading day, the Company's shares fell over 12% or $0.75, to close at $5.47 on June 24, 2013. The total drop over two trading days was over 21% or $1.46.
On November 1, 2013, after the close of trading, the Company filed a Form 8-K with the SEC, announcing the termination of its Chairman. On this news, the Company's shares fell almost 5.5% or $0.80, to close at $13.78 on November 4, 2013.
On January 24, 2014, the Company filed a Form 8-K with the SEC, announcing that it received inquiries from twelve states regarding the Company's business practices. On this news, the Company's shares fell over 10% or $0.97, to close at $8.70 on January 27, 2013.
On September 16, 2014, after the close of trading, the Company filed a Form 12b-25 with the SEC, notifying the SEC that it would delay the filing of its Annual Report on Form 10-K for the period ended June 30, 2014. As a result of this news, shares of EDMC fell $0.12 or almost 10%, to close at $1.10 on September 17, 2014.
The parties entered into a Stipulation of Settlement on September 16, 2015. This Settlement was preliminarily approved by the Court on October 1. On February 19, 2016, the Court granted final approval of the Settlement and dismissed this case with prejudice.