Career Education Corporation
Robbins Umeda LLP Announces an Investigation of Career Education Corporation
Robbins Umeda LLP, a shareholder rights litigation firm, has commenced an investigation into possible breaches of fiduciary duty and other violations of the law by certain officers and directors at Career Education Corporation (“CEC”) (NASDAQ: CECO).
Robbins Umeda LLP’s investigation focuses on whether the directors and officers of CEC harmed the company by allowing post-educational job placement rates to be improperly computed and then misleadingly conveyed to potential student applicants. On May 24, 2011, CEC issued a Form 8-K announcing that it had received a subpoena from the New York Attorney General’s Office calling on CEC to produce documents related to the company’s business and marketing practices. In addition, the company’s recently released second quarter 2011 financial results contained the revelation that an internal investigation at CEC had uncovered “improper practices” at certain of the company’s campuses. As a result, CEC retained legal counsel to investigate the prevalence of these questionable practices nationwide.
Since these allegations have surfaced, CEC has increasingly become the focus of costly public and legal scrutiny, and shares of the company’s stock have continued to decline in value. After trading as high as $22.45 on August 2, 2011, shares of CEC opened on August 23, 2011 at just $14.99 per share.
One course of conduct that may be appropriate for shareholders of CEC is to file a derivative action to hold the officers and directors that damaged CEC accountable. Remedies commonly sought in derivative actions include corporate governance reforms designed to prevent future misconduct, removal of officers or directors whose misconduct injured the corporation, and monetary payments in the form of damages and disgorgement of ill-gotten gains.
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