On October 27, 2015, Stanford's Center for Research on Education Outcomes ("CREDO") published a study regarding online charter schools, specifically mentioning K12, and published a press release summarizing the study's results. In the press release, CREDO stated that "[i]nnovative 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." That same day, K12 reported disappointing financial results for the first quarter of fiscal year 2015. On these disclosures, K12's stock price fell $1.93 per share, or 15.8%, to close at $10.25 on October 27, 2015. After the market closed that day, K12 filed a Quarterly Report on Form 10-Q with the SEC for the same fiscal quarter, disclosing therein that the Company had 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: For-Profit Virtual Schools."
Over the following three days, K12's stock price fell a cumulative $0.54 per share, or 5.2%, to close at $9.71 on October 30, 2015.
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Robert S. Willoughby
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SOURCE Pomerantz LLP