December 7, 2010
Bernstein Liebhard LLP today announced that an action has been filed in the United States District Court for the Middle District of Florida on behalf of purchasers (the “Class”) of Strayer Education, Inc. (“Strayer” or the “Company”) (NASDAQ: STRA) common stock during the period November 1, 2007 and October 13, 2010, inclusive (the “Class Period”).
Plaintiffs allege that Strayer and certain of its officers and executives violated the Securities and Exchange Act of 1934. Strayer is a for-profit post-secondary education services corporation that offers undergraduate and graduate degree programs in business administration, accounting, information technology, education, healthcare, public administration and criminal justice at 78 physical campuses in Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia, and Washington, D.C.
Plaintiffs allege that throughout the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. Specifically, defendants failed to disclose that: (i) the Company had engaged in improper and deceptive recruiting and financial aid lending practices and, due to the government’s scrutiny into the for-profit education sector, the Company would be unable to continue these practices in the future; (ii) the Company failed to maintain proper internal controls; (iii) many of the Company’s programs were in jeopardy of losing their eligibility for federal financial aid; and (iv) as a result of the foregoing, defendants’ statements regarding the Company’s financial performance and expected earnings were false and misleading and lacked a reasonable basis when made.
Significantly, the U.S. Department of Education proposed new regulations for programs, such as those run by Strayer, to continue to be eligible to receive federal financial aid. The tests for eligibility would be based on repayment rates and debt-to-income loads. Under the proposed “gainful employment” regulations, programs would need to have a repayment rate of at least 45% to continue to be eligible for federal financial aid. The regulations, if adopted, will go into effect in July 2011.
On August 13, 2010, after the market closed, the U.S. Department of Education released data on federal student-loan repayment rates at the nation’s colleges and universities. The data showed that repayment rates were 54% at public colleges and 56% at private non-profit institutions, compared to just 36% at for-profit colleges. Specifically, the data showed that the repayment rates at Strayer were just 25%. On this news, the price of Strayer stock dropped over 18%, or $36.75 per share, from a closing price of $200.01 per share on August 13, 2010 to a closing price of $163.26 per share on August 16, 2010, the following trading day, on a 482% increase in trading volume.
On October 13, 2010, the last day of the Class Period, Strayer stock fell another 13% after another for-profit education company, The Apollo Group, announced a big drop in its enrollment numbers after the market closed. The stock of Strayer, together with that of Apollo and many other for-profit education companies, fell on October 14, 2010 because the market perceived that a similar drop in enrollment was in Strayer’s future. On October 28, 2010, the other shoe dropped and Strayer announced its anticipated lower enrollment figures.
Plaintiffs seek to recover damages on behalf of all Class members who purchased or otherwise acquired shares of Strayer during the Class Period. If you purchased or otherwise acquired Strayer shares during the Class Period, and either lost money on the transaction or still hold the shares, you may wish to join in this action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than December 14, 2010.
A “lead plaintiff” is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Bernstein Liebhard LLP, or other counsel of your choice, to serve as your counsel in this action.
If you are interested in discussing your rights as a Strayer shareholder and/or have information relating to the matter, please contact Joseph R. Seidman, Jr. at (877) 779-1414 or firstname.lastname@example.org.
Bernstein Liebhard has pursued hundreds of securities, consumer and shareholder rights cases and recovered almost $3 billion for its clients. It has been named to The National Law Journal’s “Plaintiffs’ Hot List” in each of the last eight years.
You can obtain a copy of the complaint from the clerk of the court for the United States District Court for the Middle District of Florida or here.