Corinthian Colleges Plunges 4% as California AG Files Suit

Corinthian Colleges (COCO) is tumbling today after California’s attorney general filed suit against the for-profit college for “false and predatory advertising,” among other charges.

From the AG Kamala Harris’s press release:

The complaint alleges that CCI intentionally targeted low-income, vulnerable Californians through deceptive and false advertisements and aggressive marketing campaigns that misrepresented job placement rates and school programs. CCI deployed these advertisements through persistent internet, telemarketing and television ad campaigns. The complaint further alleges that Corinthian executives knowingly misrepresented job placement rates to investors and accrediting agencies, which harmed students, investors and taxpayers.

The AP notes that the charges are similar to those that were filed by now-governor Jerry Brown in 2007 and were settled for $6.5 million.

Corinthian responded in an SEC filing:

On October 10, 2013, Corinthian Colleges, Inc. (the "Company," "Corinthian," "we," "us" or other similar terms) was notified of a civil complaint filed against the Company and several of its subsidiaries by the California Attorney General's Office (the "CA AG"). As previously disclosed, we have been cooperating with an investigation initiated by the CA AG in December 2012, more than nine months ago. The Company was disappointed that it was not given advance notice of the complaint, and did not have the opportunity to discuss the allegations in the complaint with the CA AG before the complaint was filed.

The Company is committed to regulatory compliance and has robust processes in place to correctly record and disclose the job placement information we receive from our graduates and their employers. The Company is proud of the career and technical education that our 15,000 employees provide to more than 80,000 students in the United States and Canada. The Company expects to vigorously defend against this complaint.

Shres of Corinthian have dropped 4.2% to $1.96 but don’t seem to be hitting other for profit universities. ITT Educational Services (ESI) has gained 2.2% to $31, Apollo Group (APOL) has risen 0.7% to $20.44 and Devry (DV) is up 0.9% at $31.95.