A class action has been filed in the United States District Court for the District of New Jersey on behalf of purchasers (the "Class") of Lincoln Educational Services Corporation ("Lincoln" or the "Company") (NASDAQ: LINC) common stock during the period March 3, 2010 and August 5, 2010 (the "Class Period").
Lincoln and certain of its officers are charged with making a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934.
In particular, the complaint alleges that despite extensive positive statements by defendants in press releases and SEC filings during the Class Period regarding the Company's operational performance and future growth projections, including revenue growth of between 13% and 15% for 2010, these statements were false because: (1) defendants had propped up the Company's results by fraudulently inducing students to enroll in Lincoln's scholastic and educational programs and engaged in other manipulative recruiting tactics; (2) defendants had materially overstated the Company's growth prospects by failing to properly disclose that defendants had engaged in illicit and improper recruiting activities, which also had the effect of artificially inflating the Company's reported results and future growth prospects; and (3) Lincoln did not maintain adequate systems of internal operational or financial controls, which would have permitted Lincoln's reported operational statements and foreseeable growth prospects to be true, accurate or reliable.
It was only on August 5, 2010 that investors finally began to learn the truth about Lincoln after the United States General Accounting Office ("GAO") issued a report that concluded that for-profit educational institutions like Lincoln had engaged in an illegal and fraudulent course of action designed to recruit students and over-charge the federal government for the cost of such education. Following these disclosures, shares of the Company collapsed -- falling over $4.30, or 20% in a single trading day, on unusually high trading volume.
Plaintiff seeks to recover damages on behalf of all Class members who purchased or otherwise acquired shares of Lincoln during the Class Period.
