Nasdaq Halts Corinthian in Trading Flap
Job-training specialists such as Santa Ana-based Corinthian Colleges Inc., which have enjoyed a huge run-up in their stock prices over the last three years, got a few lessons this week in the fickleness of the market.
After allegations of fraud at Illinois-based Career Education Corp. surfaced Wednesday, investors took a hickory stick not only to Career -- whose stock fell 33% in two days -- but also to University of Phoenix parent Apollo Group Inc., down 5% in the two days; Sylvan Learning Systems Inc., down 9%; Education Management Corp., down 10%; and ITT Educational Systems Services Inc., down 12%.
Corinthian’s shares tumbled 13% on Wednesday and Thursday, then briefly lost an additional third of their value Friday morning because of what the Nasdaq Stock Market said was an overload of trading systems by a single customer. Late in the day, Nasdaq issued a statement saying Corinthian “was in no way responsible” for the foul-up, which had sent the company’s shares tumbling from $59.39 to $38.60 in a matter of minutes.
Twelve minutes into the decline, Nasdaq pulled the plug on trading in Corinthian shares for nearly an hour. The market ultimately took the rare step of canceling all trades of Corinthian stock from 10:46 a.m. to 10:58 a.m. EST, and Corinthian recovered to close at $56.80, down 72 cents.
Nasdaq declined to elaborate on the problems. Traders speculated that a brokerage mistakenly put too much stock out for sale, which caused heavy selling by others, said strategist John Licata of BrokerageAmerica.
Corinthian said in a statement that it “knows of no events or activities that would warrant any concern in the company’s performance.”
On Wednesday, the Santa Barbara News-Press reported on a former registrar at Career Education’s Brooks Institute of Photography who accused the company of tampering with records to help students pass inspections and increase enrollment.
Career Education denied any wrongdoing. It set up a system for employees to report potential wrongdoing and held a conference call Friday. Its stock rose $1.91 to $38.45.
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Bloomberg News was used in compiling this report.
