A letter to investors - Report on ITT Educational Services

Jul 29, 2015, 09:00 ET from www.aciassociation.com

NEW YORK, July 29, 2015 /PRNewswire/ --

ACI Association has initiated research coverage on ITT Educational Services Inc. (NYSE: ESI). Select highlights from the internally released reports are being made available to the general public (included below), with access to the entirety of the research available to new members.

Today, membership is open to readers on a complementary basis at the following URL: http://www.aciassociation.com/?c=ESI  

Highlights from our ESI Report include:

  • Response Statements by Management - On June 25, 2015, ITT Educational Services Inc.'s (ITT) Chief Executive Officer, Kevin Modany mailed a letter to certain shareholders, in response to a letter from Mr. Rohit Chopra, a former student loan ombudsman for the Consumer Financial Protection Bureau (CFPB). Kevin Modany stated that Mr. Chopra's letter is a misleading attack against the for-profit education sector, seeking to trade on and profit from his government experience. Prior to this, on June 24, 2015, the Vice President of government relations and external affairs for ITT, Nicole Elam, issued a statement regarding the same, which said, "Allegations are not facts and we think our investors will not take action based on simple assertions from someone with an ideological axe to grind."
  • ITT to present the case in the court of law - As per the letter published on ITT's website, the CEO believes that Mr. Chopra is misusing his former positions in an attempt to influence the corporate affairs of the Company. As per Kevin Modany, Mr. Chopra's letter expressed myopic and misguided views for the sector that he was previously responsible for regulating. Kevin Modany also stated that timing and tenor of Mr. Chopra's attack has raised troubling questions about his compliance with basic standards of ethics, as his letter comes just after three business days of his resignation from office, which otherwise prohibits him from commenting on pending litigation.  
  • Unproven Allegations: The CEO further stated that ITT is highly regulated at both the state and federal levels, and the Company has not been found by any court to violate any law, state or federal.  Kevin Modany informed that Mr. Chopra's outlandish claims about supposed "legal infractions" by ITT and its longstanding management, are baseless and are just unproven allegations. According to the CEO, ITT is not only vigorously defending those unfounded allegations but is also looking forward to present its case in a court of law.
  • Non-disclosure of facts by Mr. Chopra - While citing a few examples, wherein ITT was given a clean chit by various courts, the CEO stated that Mr. Chopra cited a case in his letter, where the judge dismissed a large part of the CFPB's case at the first stage of the litigation. According to the CEO, Mr. Chopra  has not disclosed actual facts to the investors or media as the private loans at issue in the case were never offered by ITT, and have not been offered at all for almost half a decade. The CEO stated that Mr. Chopra's letter ignored many positive facts about ITT. ITT has been a leader in achieving better student outcomes, at lower cost to taxpayers, and has awarded scholarships to more than $260 million. Consequently, no ITT students have needed to take out private educational loans in the past four years.

To find out how this influences our rating on ITT Educational Services Inc., read the full report in its entirety here: http://www.aciassociation.com/?c=ESI

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