SAN DIEGO, March 28, 2013 /PRNewswire/ -- Shareholder rights law firm Robbins Arroyo LLP is investigating whether officers and directors of ITT Educational Services, Inc. (NYSE: ESI) breached their fiduciary duties to shareholders.
ITT Educational Services Reveals that It Is Being Investigated by the SEC
After the market closed on February 22, 2013, ITT Educational Services issued a press release announcing that, on February 8, 2013, the company received a subpoena from the U.S. Securities and Exchange Commission ("SEC"). In the letter accompanying the subpoena, the SEC informed ITT Educational Services that is was investigating the company's accounting associated with a 2009 private education loan program and risk sharing agreement between ITT Educational Services and an unaffiliated entity. Further, the SEC announced that it was investigating the company's accounting of certain loan guarantee agreements made through its PEAKS Private Student Loan Program. On news of the SEC investigation, ITT Educational Services' stock declined $3.10 per share, or nearly 17%, to close at $15.53 per share on February 25, 2013.
ITT Educational Services to Pay Sallie Mae Corp. $46 Million to Settle Lawsuit
In 2011, Sallie Mae initiated a lawsuit alleging that ITT Educational Services failed to fulfill its responsibilities under a risk sharing agreement dated July 17, 2007. Pursuant to this risk sharing agreement, ITT Educational Services guaranteed the repayment of any private education loans that Sallie Mae charged off above a certain percentage of the total dollar volume of private education loans made pursuant to the agreement. Sallie Mae's lawsuit sought a little over $26 million from ITT Educational Services. On December 28, 2012, ITT Educational Services agreed to pay Sallie Mae $46 million to settle this lawsuit. As a result, ITT Educational Services expects to incur an after-tax charge to net income of about $13.2 million, which translates to a reduction of $0.56 to fourth quarter per-share earnings.
Robbins Arroyo LLP Investigates Failed Internal Controls and Potential Improper Public Statements by ITT Educational Services' Officers and Directors
Robbins Arroyo LLP's investigation concerns whether certain of ITT Educational Services' officers and directors failed to implement adequate internal controls to ensure proper accounting and breached certain duties regarding the risk sharing agreement with Sallie Mae. Specifically, Robbins Arroyo LLP is investigating whether these fiduciaries issued false and misleading statements regarding the company's: (i) accounting of the 2009 loan risk-sharing agreement and its PEAKS program; (ii) maintenance of proper internal accounting controls to ensure that the risk-sharing agreements were properly recorded; (iii) and the implementation and maintenance of internal controls to ensure that the Company complied with any risk-sharing agreements.
Robbins Arroyo LLP highlights that ITT Educational Services shareholders have the option to pursue a shareholder derivative action through which shareholders aim to hold insider wrongdoers accountable for their actions, prevent future misconduct, and bring long-term value back to the company. Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested. For more information, please go to http://www.robbinsarroyo.com.
Press release link: http://www.robbinsarroyo.com/shareholders-rights-blog/itt-educational-services/
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SOURCE Robbins Arroyo LLP