San Diego, Aug 05, 2011 (Shareholders Foundation) -- An investigation on behalf of investors in shares of Career Education Corp. (NASDAQ:CECO) was announced over possible Violations of Securities Laws by Career Education Corp. and others in connection with its recent disclosure of improper practices at certain of its health education segment campuses .
The investigation by a law firm focuses on possible NASDAQ:CECO shareholder claims based on potential violations of the federal securities laws. Specifically the investigation concerns whether Career Education Corp. or others may have violated securities laws by issuing a series of statements regarding its business, its prospects and its operations that were materially false and misleading at the time they were made.
Career Education Corp. has reported a substantial increase in its financial performance over the past years. Career Education Corporation reported that its annual Total Revenue from $1.62billion in 2007 to $2.12billion in 2010 and its Net Income rose from $114.24million for 07, respectively $93.83million in 2008 to $165.59million in 2010.
Shares of Career Education Corp. (Public, NASDAQ:CECO) grew from as low as $12.05 in March 08 to over $34 in April 2010. However, CECO shares fell from over $34 in April to under $17 in October 2010 after for-profit education companies have come under scrutiny.
In August 2010 the U.S. Government Accountability Office (GAO) issued a report titled Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices that detailed undercover investigations into 15 for-profit schools that uncovered misconduct by school staff. In particular, so the report, admissions or financial aid representatives at all 15 for-profit colleges provided their undercover applicants with deceptive or otherwise questionable statements, which included information about the colleges accreditation, graduation rates and its students prospective employment and salary qualifications, duration and cost of the program, or financial aid. Representatives at certain schools also employed hard-sell sales and marketing techniques to encourage students to enroll, so the report.
Despite the controversy shares of Career Education Corp. have increased to as high as $25 in July 2011.
However, NASDAQ: CECO shares fell abruptly from $25 on July 26, 2011 to $17.32 on August 5 after Career Education Corporation reported on August 3 its results for Second Quarter 2011. While Career Educations second quarter 2011 Total Revenue fell compared to its second quarter Total Revenue in 2010, its second quarter Net Income increased. Career Education Corporation (NASDAQ: CECO) reported total revenue of $497.2 million, and net income of $55.4 million for the second quarter of 2011 compared to total revenue of $527.7 million and net income of $64.3 million for the second quarter of 2010.
Furthermore and more importantly, Career Education Corp said that it has identified improper practices at certain of its health education segment campuses relating to the determination of reported placement rates.
Career Education Corp said that it recently discovered these practices in preparing its response to the previously disclosed subpoena issued to the company by the New York Attorney General on May 17, 2011.
NASDAQ: CECO stocks closed on Friday, August 5, 2011 at $17.71 per share.