ITT Educational Services, Inc. Investors filed lawsuit alleging securities laws violations

Nov. 4, 2010 - PRLog -- An investor in ITT Educational Services, Inc.  filed a lawsuit in the United States District Court for the Southern District of New York against ITT Educational Services over alleged violations of Federal Securities Laws. The lawsuit follows a report by the U.S. Government Accountability Office with the title“ Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices.

If you purchased common stock of ITT Educational Services, Inc. (ESI) between October 23, 2008 and August 13, 2010, you have certain options and there are strict and short deadlines running. Deadline: December 30, 2010. Those ESI stockholders and current long term ESI investors, including those who (also) purchased ESI shares prior to October 2008 and continue to presently hold those shares, should contact the Shareholders Foundation, Inc by email mail@shareholdersfoundation.com or call +1(858) 779 – 1554.

According to the complaint the plaintiff alleges on behalf of purchasers of the common stock of ITT Educational Services, Inc. (ESI) between October 23, 2008 and August 13, 2010 that ITT Educational Services and certain of its officers and executives violated the Securities Exchange Act of 1934 by issuing between October 23, 2008 and August 13, 2010 materially false and misleading statements regarding its business and financial results. ITT Educational Services, Inc. almost doubled its total revenue over the past four years. ITT Educational Services, Inc. reported in 2006 $757.76million Total Revenue, in 2007 $869.51million, in 2008 $1.01533billion, and in 2009 $1.31919billion. Its Net Income rose during the same time frame from $118.52million to $300.26million.

The U.S. Government Accountability Office (“GAO”) report “Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices” details undercover investigations into 15 for-profit schools that uncovered misconduct by school staff.  According to this GAO study, the college personnel at schools may have encouraged applicants to falsify their financial aid forms to qualify for federal aid and pressured applicants to sign a contract for enrollment prior to allowing them to speak to a financial advisor. The undercover tests at 15 for-profit colleges found that 4 colleges encouraged fraudulent practices and that all 15 made deceptive or otherwise questionable statements to GAO’s undercover applicants. In particular, so the report, admissions or financial aid representatives at all 15 for-profit colleges provided our undercover applicants with deceptive or otherwise questionable statements, which included information about the college’s accreditation, graduation rates and its student’s prospective employment and salary qualifications, duration and cost of the program, or financial aid. Representatives at schools also employed hard-sell sales and marketing techniques to encourage students to enroll, so the report.

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 rate at ITT Educational Services was just 31%. On this news, so the lawsuit, the price of ITT Educational Services (ESI) stock dropped 14.61%, or $9.40 per share, from a closing price of $64.33 per share on August 13, 2010 to a closing price of $54.93 per share on August 16, 2010, the following trading day. Shares of ITT Educational Services, Inc.  recently traded at $60.58 per share, less than half of its current 52weekHigh of $121.88 per share and its all time high of $128.87 per share during February 2009.
Recently the Attorney General of Florida Bill McCollum launched also an investigation into some for-profit education companies in that regard.

Those who purchased common stock of ITT Educational Services, Inc. (ESI) between October 23, 2008 and August 13, 2010, have certain options and there are strict and short deadlines running. Deadline: December 30, 2010. Those ESI stockholders and current long term ESI investors, including those who (also) purchased ESI shares prior to October 2008 and continue to presently hold those shares, should contact the Shareholders Foundation, Inc by email mail@shareholdersfoundation.com or call +1(858) 779 – 1554.

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