According to the law firm press release, Bridgepoint, together with its subsidiaries, provides postsecondary education services in the United States. The Company was formerly known as TeleUniversity, Inc. and changed its name to Bridgepoint Education, Inc. in February 2004. Bridgepoint’s academic institutions, Ashford University and University of the Rockies, offer associate’s, bachelor’s, master’s, and doctoral degree programs in the disciplines of business, education, psychology, social sciences, and health sciences. Bridgepoint offers its programs primarily through online, and also at its campuses. As of December 31, 2017, its institutions offered approximately 1,200 courses and 80-degree programs, with 45,730 students enrolled.
As a means of increasing enrollment, the Company formed various corporate partnerships with employers to offer their employees a way to pursue and complete a college degree without incurring any student debt, referred to as the Corporate Full Tuition Grant (“FTG”) program. In 2017, enrollments in the Company’s FTG program accounted for approximately 10% of its total enrollment.
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) Bridgepoint’s processes for recording revenue for its FTG program were inaccurate; (ii) Bridgepoint maintained deficient internal controls; (iii) due to the foregoing deficiencies, Bridgepoint was prone to and did commit material accounting errors related to revenue, provision for bad debts, accounts receivable and deferred revenue, which resulted in the overstatement of revenue and expenses; and (iv) as a result, Bridgepoint’s public statements were materially false and misleading at all relevant times.
On March 7, 2019, Bridgepoint announced that it had “determined to restate the Company’s previously issued unaudited condensed consolidated financial statements, and advised that those financial statements should not be relied upon, for the three and nine months ended September 30, 2018.” Bridgepoint stated that the processes used for recording revenue for the FTG program portion of its student contracts “were not designed with sufficient precision,” leading to “material” accounting errors related to revenue, provision for bad debts, accounts receivable and deferred revenue, which resulted in the overstatement of revenue and expenses. Bridgepoint also identified weaknesses in internal controls.
On this news, Bridgepoint’s stock price plummeted by $3.21 per share, or over 34%, to close at $6.22 per share on March 7, 2019, on unusually heavy trading volume.
On August 2, 2019, the Court issued an Order appointing Lead Plaintiff and Counsel. Lead Plaintiff filed an amended Complaint on October 1.