ITT Educational Services Inc.
) has been facing various litigation processes lately. Most
recently Holzer & Holzer, LLC, a Georgia-based law firm, began
investing whether the company has complied with the necessary state
and federal laws. There have been speculations that ITT Educational
Services has engaged in improper and unlawful credit practices
during the time period between Jul 2011 and Dec 2011.
A number of other law firms including Pomerantz LLP, Johnson &
Weaver, LLP, Rosen Law Firm, P.A., Levi & Korsinsky, and Law
Offices of Howard G. Smith have begun investigating potential
claims against ITT Educational. The firms will inspect whether the
company has violated any of the federal securities laws or has
provided inaccurate statements regarding its true financial
ITT Educational Services has recently been in news for the wrong
reasons. Last week, the education company called off its sale and
lease back deal with College Portfolio Buyer LLC (CPB) which would
have boosted its cash position by $119.1 million. The termination
of the deal is a significant blow to investor confidence.
ITT Educational also has not been able to file its earnings results
since the fourth quarter of 2013 owing to uncertainty related to
the accounting treatment of the PEAK Private Student Loan Program
in the company's financial statements. As a result, the company may
be required to provide a letter of credit to the Department of
Education (DOE), as the education company is facing the threat of
being declared "not financially responsible" by the DOE.
In addition, ITT Educational withdrew its previously provided
guidance for 2014 on May 22 as the company could face restrictions
in terms of student financial aid funding.
On Aug 4, 2014, ITT Educational announced that its CEO Kevin M.
Modany has notified the board of directors about his plan to
resign, effective from Feb 4, 2015. He has already stepped down as
the director and chairman. Modany has been the CEO of the company
since Apr 2007. The company has named John Dean as executive
All these controversies have severely affected the company's share
price this year. Shares of this Zacks Rank #3 (Hold) company have
lost over 70% since Jan 2014.
However, some other education companies are doing well.
Better-ranked companies in the space include Strayer Education Inc.
), Grand Canyon Education Inc. (
) and Capella Education Company (
), all carrying a Zacks Rank #2 (Buy).
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