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Stock Market & Financial Investment News

News Breaks
February 25, 2013
11:45 EDTESIITT Educational sinks after disclosing SEC probe
For-profit educational company ITT Educational (ESI) is tumbling after the company disclosed late Friday in a regulatory filing that it is being investigated by the SEC. The SEC subpoenaed, among other things, documents related to two private student loan programs launched by ITT, the company stated. The first private loan program was launched by ITT with an "unaffiliated entity" in 2009 and included a risk sharing agreement between the entity and ITT. The SEC also subpoenaed information related to the PEAKS Private Student Loan Program, which ITT initiated in 2010. Under the PEAKS program an unaffiliated lender provided loans to ITT students, and then sold the loans to a trust. ITT Educational agreed to guarantee the trust's debt, the company stated. In a note to investors earlier today, Wells Fargo analyst Trace Urdan reported that critics have said that ITT has not set aside enough money for both of these programs, and that the company should include liabilities from the programs on its balance sheet. If the SEC agrees with these conclusions, ITT may be forced to sell additional stock in order to provide sufficient collateral for its loans under federal law, Urdan wrote. Furthermore, the Department of Education may determine that the funds which ITT obtained from the loan programs should not qualify as independent cash tuition payments under the 90/10 rule. This rule requires for-profit education companies to obtain at least 10% of their revenue from sources other than the federal government. Under either of the scenarios, ITT students may be temporarily unable to obtain student loans, Urdan wrote, but added that he doesn't expect this scenario to occur. The analyst maintained a Market Perform rating on the stock, which sank $2.50, or 13.5%, to $16.05 in late morning trading.
News For ESI From The Last 14 Days
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February 8, 2016
18:08 EDTESIEducation Department creates enforcement unit targeting education institutions
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January 27, 2016
12:28 EDTESIFor-profit education names fall after FTC sues DeVry over marketing
DeVry Education (DV) and its peers in the for-profit education space are falling after the Federal Trade Commission filed suit against the company, alleging that DeVry's advertisements "deceived" consumers about the likelihood of finding jobs in their chosen fields of study and earning more than graduates from other universities. In a related action, the Department of Education is also moving against the company for those same practices, requiring it to stop the allegedly deceptive advertisements and take steps to ensure it can verify the truthfulness of its post-graduation employment outcomes, including hiring an independent auditor and informing students of its "unsubstantiated" statistics. The Department's action comes after its investigation of DeVry found the postgraduation employment claims "have not been substantiated to the extent required by law." PRICE ACTION: Shares of DeVry crashed 13.5% to $20.54 following the news, while Apollo Education (APOL), ITT Educational (ESI) and Strayer Education (STRA) each slid over 2% and Bridgepoint (BPI) fell 1%.

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