NEW YORK, Aug. 30, 2016 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against K12 Inc. ("K12" or the "Company") (NYSE: LRN) and certain of its officers. The class action, filed in United States District Court, Northern District of California, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired K12 securities between November 7, 2013 and October 27, 2015, both dates inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934 (the "Exchange Act").
If you are a shareholder who purchased K12 securities during the Class Period, you have until September 18, 2016 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at email@example.com or 888.476.6529 (or 888.4-POMLAW), toll free, ext. 9980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.
K12 is a technology-based education company that purportedly provides technology-based educational products and solutions to public school districts, public schools, virtual charter schools, private schools, and families.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose: (1) that K12 was publishing misleading advertisements about students' academic progress, parent satisfaction, their graduates' eligibility for University of California and California State University admission, class sizes, the individualized and flexible nature of K12's instruction, hidden costs, and the quality of the materials provided to students; (2) that K12 submitted inflated student attendance numbers to the California Department of Education in order to collect additional funding; (3) that, as a result of the aforementioned practices, the Company was open to potential civil and criminal liability; (4) that the Company would likely be forced to end these practices, which would have a negative impact on K12's operations and prospects, and/or that K12 was, in fact, ending the practices; and (5) that, as a result of the foregoing, Defendants' statements about K12's business, operations, and prospects, were false and misleading and/or lacked a reasonable basis.
On October 27, 2015, Stanford's Center for Research on Education Outcomes ("CREDO") published a study regarding online charter schools, specifically mentioning K12. CREDO also published a press release in conjunction with the study, summarizing the results of the study. CREDO, in the press release, stated: "Innovative new research suggests that students of online charter schools had significantly weaker academic performance in math and reading, compared with their counterparts in conventional schools." Multiple news organizations publicized the CREDO study.
On the same day, October 27, 2015, the Company issued a press release entitled "K12 Inc. Reports First Quarter Fiscal 2016 With Revenue of $221.2 Million." Therein, the Company reported disappointing financial results including "[r]evenues of $221.2 million, compared to $236.7 million in the first quarter of FY 2015," "EBITDA . . . of negative $3.9 million, compared to $3.7 million in the first quarter of FY 2015," and an "[o]perating loss of $20.5 million, compared to an operating loss of $13.2 million in the first quarter of FY 2015."
On this news, K12's stock price fell $1.93 per share, or 15.8%, to close at $10.25 per share on October 27, 2015, on unusually heavy trading volume.
After the market closed on October 27, 2015, K12 filed its Form 10-Q with the SEC for the fiscal quarter ended September 30, 2015. Therein, the Company disclosed that it received a subpoena from the Attorney General of the State of California, Bureau of Children's Justice in connection with an investigation styled "In the Matter of the Investigation of: ForProfit Virtual Schools."
Though the market did not immediately react to the disclosure of the subpoena buried in the Company's Form 10-Q, K12's stock price slid a cumulative $0.54 per share, or 5.2%, over three days from a close of $10.25 per share on October 27, 2015, to a close of $9.71 per share on October 30, 2015.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and Los Angeles, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
Robert S. Willoughby
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SOURCE Pomerantz LLP