State Of Oregon Joins Class-Action Suit Against Apollo Group

The state of Oregon has joined a securities fraud class-action lawsuit against Apollo Group Inc. (APOL) and several of its executives, alleging the for-profit college operator misled investors about its revenue between 2007 and 2010.

The Oregon Public Employees Retirement Fund lost $10 million as Apollo's stock price dropped in the wake of the company's disclosure of a Securities and Exchange Commission inquiry and heightened scrutiny of the entire for-profit college sector, according to a statement released by Oregon Attorney General John Kroger and Treasurer Ted Wheeler. The retirement fund had total assets of $51 billion at Aug. 31.

"Companies that cook their books will have to answer to Oregon in court," Kroger said. A representative from Apollo wasn't immediately available for comment.

The lawsuit, filed in U.S. District Court in Arizona, alleges that Apollo failed to account for losses that stemmed from student withdrawals. The company disclosed in October 2009 that it was the subject of an SEC probe regarding its revenue-recognition practices. Kroger and Wheeler said Apollo's stock tumbled on that news, and again this past August when a Government Accountability Office report found representatives at a number of for-profit colleges provided misleading and even fraudulent information to undercover agents posing as prospective students.

Oregon is seeking lead plaintiff status in the class-action suit.

-By Melissa Korn, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com

Apollo Education Group, Inc. (NASDAQ:APOL)
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