According to the law firm press release, CCA, together with its subsidiaries, owns and operates privatized correctional and detention facilities in the United States. The Company owns, operates, and manages prisons and other correctional facilities, and provides inmate residential and prisoner transportation services for governmental agencies. As of 2015, CCA was the largest private corrections company in the United States, and manages more than 65 correction and detention facilities in 19 states and the District of Columbia.
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: (i) CCA’s facilities lacked adequate safety and security standards and were less efficient at offering correctional services than the Federal Bureau of Prisons’ (“BOP”) facilities; (ii) CCA’s rehabilitative services for inmates were less effective than those provided by BOP; (iii) consequently, the U.S. Department of Justice (“DOJ”) was unlikely to renew and/or extend its contracts with CCA; and (iv) as a result of the foregoing, CCA’s public statements were materially false and misleading at all relevant times.
On August 18, 2016, Deputy Attorney General Sally Yates announced the DOJ’s decision to end its use of private prisons, including those operated by CCA, after officials concluded that the facilities are both less safe and less effective at providing correctional services than those run by the federal government.
On this news, CCA’s share price fell $9.65, or 39.45%, to close at $17.57 on August 18, 2016.