According to the law firm press release, ITT provides postsecondary degree programs in the United States in various fields, including business, criminal justice, information technology, electronics technology, drafting and design, and nursing and health sciences.
The Complaint alleges that defendants made false and/or misleading statements and failed to disclose material adverse facts about the Company’s business, operations and prospects, including material information concerning two private education loan programs for its students.
Specifically, defendants misrepresented and/or failed to disclose that: (1) the Company had failed to consolidate the financial results of the PEAKS Trust into ITT’s financial results; (2) the Company’s financial statements contained errors related to the accounting of the PEAKS Trust and PEAKS Program; (3) the Company had improperly accounted for is guarantee obligations under the PEAKS program; (4) as a result, the Company’s financial results were overstated; (5) the Company lacked adequate internal and financial controls; and (6), as a result of the foregoing, ITT’s financial statements were materially false and misleading at all relevant times.
On September 19, 2014, the Company filed a Form 8-K with the Securities and Exchange Commission and disclosed that on August 7, 2014, the Company received a “Wells Notice” from the Securities and Exchange Commission, Division of Enforcement, notifying the Company that the division Staff had made a preliminary determination to recommend that the SEC file an enforcement action against the Company.
According to the Company, the Staff informed ITT that “the enforcement action would allege violations of Sections 10(b), 13(a) and 13(b)(2) of the Securities Exchange Act of 1934,” and various Rules promulgated under the Exchange Act, and “the Staff’s recommendation may: involve a civil injunctive action, public administrative proceeding and/or cease-and-desist proceeding against us; and seek remedies that include an injunction, a cease-and-desist order and monetary relief, including civil monetary penalties.”
Following this news, the price of ITT shares fell 35 percent, or $2.70 per share, to close at $4.95 per share on September 19, 2014.
On November 2, 2015, the parties entered into a Stipulation of Settlement. This Settlement was preliminarily approved by the Court on November 4.