Grand Canyon Education, Inc.
Lead Plaintiff Deadline: 07/13/2020
SUMMARY OF CASE:
A securities class action has been filed against Grand Canyon Education, Inc. (LOPE) on behalf of investors in Grand Canyon common stock between January 5, 2018 through January 27, 2020. This case has been filed in the USDC – District of Delaware.
The complaint alleges that Defendants inflated Grand Canyon’s financial results by using GCU as an off-balance-sheet entity to which Grand Canyon was able to funnel expenses and costs in exchange for a disproportionate amount of revenue. Defendants repeatedly made false and misleading statements to investors describing GCU as a “non-profit” and “independent” institution and misstating Grand Canyon’s role as a third-party provider of education services. As a result of Defendants’ misrepresentations, shares of Grand Canyon’s common stock traded at artificially inflated prices during the Class Period.
The truth emerged through a series of disclosures beginning on September 9, 2019, when short seller Citron Research published a report examining Grand Canyon’s financials and concluding that the Company “is stuffing GCU with expenses to inflate its own profitability and as a result bankrupting GCU.”
Then, after the close of market on November 6, 2019, Grand Canyon announced that it had received a letter from the U.S. Department of Education (“DOE”) denying its application for designation of GCU as a non-profit. That denial was based on the DOE’s finding that GCU was Grand Canyon’s “captive client” and GCU “is not the entity actually operating [GCU]” (emphasis in the original).
Finally, on January 28, 2020, Citron Research published a second report expanding on the DOE’s findings, and citing hundreds of pages of supporting documentation from Grand Canyon that Citron obtained through the Freedom of Information Act. That report described Grand Canyon as the “educational Enron,” using a “captive non-reporting subsidiary” to “dump expenses and liabilities, while receiving a disproportionate amount of revenue at inflated margins in order to artificially inflate the stock price.” As a result of these disclosures, the price of Grand Canyon common stock declined precipitously.