Santa Ana-based Corinthian Colleges Inc. said Wednesday it received a warning that it is not in compliance with Nasdaq rules, after the company failed to file its last two quarterly financial reports.
If Corinthian does not come up with a plan to correct its financial reporting problems, the company could be subject to delisting from the stock exchange, according to Nasdaq rules.
The for-profit college operator has been in serious financial distress since the Department of Education temporarily suspended its access to federal student aid in June. As part of a settlement with the department, Corinthian agreed to sell off 85 of its 107 campuses and online programs in exchange for temporary cash infusions to keep the company afloat.
The department placed sanctions on Corinthian amid concerns that the company had falsified student job-placement rates and other academic data. Officials have requested documentation from Corinthian since January but were not satisfied with the responses.
Corinthian said in a news release Wednesday that its agreement with the Department of Education has put “significant constraints on the company’s resources,” preventing it from completing the most recent financial reports.
“The company could not eliminate the delay without unreasonable effort and expense,” according to the release.
A company spokesman did not respond to a request for additional comment.
In a securities filing last week, Corinthian said the ongoing process of selling off its campuses makes it difficult to get an accurate picture of company finances.
The company expects “substantial deterioration” of its revenue compared with last year, according to the filing.
Corinthian must submit a plan to get back into compliance with Nasdaq rules by next Friday. The company said in the release that it has “not yet determined the action it will take.”
Nasdaq guidelines require that companies file timely financial reports with the Securities and Exchange Commission. If a company fails to get back into compliance, it can be subject to delisting.
Corinthian also received a notice of noncompliance from Nasdaq in July, after the company’s stock price had closed below $1 for 30 consecutive business days.
The company’s stock price has hovered below 20 cents since it entered into the agreement to sell off its schools in July.
Corinthian’s ongoing financial woes have dovetailed with increased scrutiny from state and federal regulators. The U.S. Consumer Financial Protection Bureau filed suit against the school in September, alleging a “predatory lending” scheme involving private student loans.
In August, the company said it had received a grand jury subpoena from the U.S. attorney’s office in Los Angeles.
The company is also under investigation by more than a dozen attorneys general over its financial aid, recruiting and job-placement practices.