Class Action Lawsuit Against DeVry, Inc.
November 14, 2010
I foresee more and more suits such as this against educational organizations. I blogged about college tuition to be the next bubble to burst here and it looks like legally things are starting to happen as well.
The Complaint charges DeVry, a global provider of educational services, and certain of its officers and directors with violations of federal securities laws. Specifically, the Complaint alleges that defendants failed to disclose the following: i the Company had engaged in improper and deceptive recruiting and financial aid lending practices and, due to the governments scrutiny into the for-profit education sector, DeVry would be unable to continue these practices in the future; ii DeVry failed to maintain proper internal controls; and iii many of the Companys programs were in jeopardy of losing their eligibility for federal financial aid.On August 13, 2010, after the market closed, the U.S. Department of Education released data on federal student-loan repayment rates at the nations colleges and universities. The data showed that the repayment rate at DeVry was just 38%. On this news, DeVry stock dropped 8.76% from a closing price of $42.71 on August 13, 2010 to a closing price of $38.97 per share on August 16, 2010.