UPDATE: Oregon Joins Class-Action Suit Against Apollo Group
October 18 2010 - 7:31PM
Dow Jones News
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.
The lawsuit, filed in August 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.
"Apollo Group takes its disclosure obligations very seriously
and intends to defend this lawsuit vigorously," company spokesman
Manny Rivera said in an e-mailed statement.
Oregon is seeking lead plaintiff status in the class-action
suit.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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