CAPPS - Avocacy and Communication Professional Development

California Association of Private Postsecondary Schools

Career Education Corp. to Settle With Investors for $27.5-Million

11/08/2013

The Chronicle of Higher Education.  November 8, 2013.  The Career Education Corporation has received preliminary approval for a $27.5-million settlement with investors for making misleading statements about job-placement rates for graduates of its programs, according to Bloomberg News.

The for-profit higher-education company was sued last year by a shareholder, Thurman Ross, and other investors, who asserted that Career Education had inflated placement rates and made other misleading statements in filings with the Securities and Exchange Commission. In the settlement, the company does not admit to any wrongdoing or liability.

Settlements of three other lawsuits—alleging fiduciary breach of duty by Career Education’s chief executive, Gary E. McCullough, and other members of its board—were also given tentative approval. Under the terms of the settlements, the company has four years to carry out management and compliance reforms.

The settlement with shareholders comes on the heels of a $10-million payout by the company to the State of New York, also over the alleged inflation of job-placement data.

A hearing on final approval is scheduled for April.