US High Court Rejects Review Of Apollo Group Securities Case
March 07 2011 - 1:07PM
Dow Jones News
The U.S. Supreme Court on Monday rejected Apollo Group Inc.'s
(APOL) challenge to a jury verdict that found the for-profit
college company had committed securities fraud.
The case centered on allegations that Apollo's stock price was
artificially inflated because management concealed details of a
2003 U.S. Department of Education report that found recruiter
compensation at its University of Phoenix violated federal
regulations. The original suit was filed in October 2004.
A jury ruled for the plaintiff investors, handing down a penalty
of as much as $5.55 per share. The total amount will depend on how
many shareholders file claims, though an early estimate came out to
about $278 million.
A trial judge later threw out that jury verdict, but a San
Francisco-based appeals court reinstated it last year.
In its appeal to the Supreme Court, Apollo said the jury verdict
could not stand because the company's share price didn't drop until
a week after news reports of the department's review had emerged.
Shares ultimately slipped after the media attention and a negative
report and downgrade by analysts at UBS AG (UBS), but Apollo said
the analyst report couldn't support a securities fraud suit.
Apollo set aside $177.1 million in reserve in 2010, saying
damages likely will range from $127.2 million to $228 million. The
company recorded an additional $900,000 in its fiscal first
quarter.
Apollo settled with the Education Department in 2004 for $9.8
million.
The Supreme Court denied Apollo's challenge without comment, and
Apollo had no immediate comment.
The case is Apollo Group v. Policemen's Annuity and Benefit Fund
of Chicago, 10-649.
-By Brent Kendall, Dow Jones Newswires; 202-862-9222;
brent.kendall@dowjones.com
-Melissa Korn contributed to this story
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