NEW YORK, March 14, 2016 /PRNewswire/ -- Robbins Geller Rudman & Dowd LLP ("Robbins Geller") (http://www.rgrdlaw.com/cases/apolloeducation/) today announced that a class action has been commenced in the United States District Court for the District of Arizona on behalf of purchasers of Apollo Education Group, Inc. ("Apollo" or the "Company") (NASDAQ: APOL) Class A common stock during the period between June 26, 2013 and October 21, 2015 (the "Class Period").
If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel, Samuel H. Rudman or David A. Rosenfeld of Robbins Geller at 800/449-4900 or 619/231-1058, or via e-mail at firstname.lastname@example.org. If you are a member of this class, you can view a copy of the complaint as filed or join this class action online at http://www.rgrdlaw.com/cases/apolloeducation/. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
The complaint charges Apollo and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Apollo owns and operates several for-profit educational institutions throughout the United States, its largest being the University of Phoenix.
The complaint alleges that throughout the Class Period, Apollo reported generating billions of dollars in revenues while concealing that a substantial portion of those revenues were being derived through improperly aggressive recruiting tactics being undertaken at U.S. military bases across the country that contradicted an Executive Order signed into law by President Barrack Obama on April 27, 2012. The express intent of the Executive Order, which had been implemented in large part by the spring of 2013, was to stop for-profit secondary education providers like the University of Phoenix from continuing to take advantage of present and former members of the U.S. military. Apollo's improperly aggressive recruiting tactics also allegedly violated the express terms of the contractual agreements the Company had entered into with the U.S. Department of Defense ("DoD") in February 2012 and July 2014 to permit the University of Phoenix to continue to participate in the DoD's tuition assistance programs.
During the Class Period, Defendants also concealed that efforts to transition Apollo's online classroom platform to a new "industry-leading private cloud infrastructure, offering enhanced scalability, reliability and performance," were failing because, unbeknownst to investors, from its inception the new platform was not functioning as designed due to software compatibility problems that prevented students from signing onto their online courses, which had dramatically increased student drop-out rates. Adding insult to injury, in addition to repeatedly minimizing the true extent of the software compatibility problems, even when later being questioned about them by stock analysts, Defendants hid from the investment community the deleterious impact the software compatibility problems were having not only on retention rates but on new student enrollment.
As a result of Defendants' false statements during the Class Period, which emphasized Apollo's financial successes and strong financial prospects, the price of Apollo's Class A common stock traded at artificially inflated levels, reaching a Class Period high of $35.92 per share in intraday trading on January 22, 2014. With the price of the Class A common stock artificially inflated, certain of Apollo's senior executives cashed in, selling almost $42 million of their personally held shares at artificially inflated prices.
On January 8, 2015, Apollo announced that its conversion to the new online platform was more challenging than had been anticipated and had resulted in a greater than expected impact on retention. Due to other more positive statements made that day concerning the strong ongoing enrollment and profitability trends being experienced, the price of Apollo stock declined only moderately. However, when on March 25, 2015 Apollo disclosed that it had actually experienced a significant disruption with respect to the new online classroom platform that was not only adversely impacting retention but had decreased enrollment by 13% in the quarter, forcing Apollo to cut its annual revenue forecast, the stock price declined significantly.
Then, on June 30, 2015, the Center for Investigative Reporting ("CIR") published an exposé entitled "University of Phoenix sidesteps Obama order on recruiting veterans." In its exposé, CIR detailed how the University of Phoenix was violating President Obama's Executive Order, as well as the contractual agreements the University of Phoenix had entered into with the DoD, through a variety of improperly aggressive recruiting tactics. That same day U.S. Senator Richard J. Durbin sent a letter to Secretary of Defense Ashton Carter bringing the matters raised in the CIR exposé to his attention and calling for the military to investigate and put an end to the illicit recruiting tactics.
When the DoD formally placed the University of Phoenix on probation on October 7, 2015, and banned it from recruiting on military bases and prevented troops from using federal funds for its classes, the price of Apollo common stock plunged further. And when Apollo disclosed on October 22, 2015 that its fourth quarter and fiscal year 2015 results had been negatively impacted and that its future results would continue to be negatively impacted by actions the Company had been forced to take to bring its operations into compliance with the law, the price of the common stock fell further. In the end, the shares declined approximately 80% from their Class Period high – or nearly $29 per share – erasing more than $3 billion in market capitalization.
Though the Company has since reported that the DoD lifted the ban on troops using federal funds for University of Phoenix courses, the University of Phoenix remains on formal probation with the DoD and under intense scrutiny, and Apollo has agreed to sell itself to a private equity fund for $9.50 per share, down more than 73% from the stock's Class Period high.
Plaintiff seeks to recover damages on behalf of all purchasers of Apollo Class A common stock during the Class Period (the "Class"). The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller, with 200 lawyers in ten offices, represents U.S. and international institutional investors in contingency-based securities and corporate litigation. The firm has obtained many of the largest securities class action recoveries in history and was ranked first in both the amount and number of shareholder class action recoveries in ISS's SCAS Top 50 report for 2014. Please visit http://www.rgrdlaw.com/cases/apolloeducation/ for more information.
SOURCE Robbins Geller Rudman & Dowd LLP