Corinthian Colleges’ stock tumbles 23% since disclosing SEC probe
Shares of Corinthian Colleges Inc. fell 23% last week after the Santa Ana for-profit college chain disclosed that the Securities and Exchange Commission had launched an investigation into the company.
Corinthian said it received a subpoena this month from the SEC related to student recruitment, degree completion, job placement, loan defaults and compliance with U.S. Education Department rules, among other issues.
The company said in a securities filing it intends to cooperate with the SEC investigation. A company spokesman declined to comment further.
Shares of Corinthian Colleges closed at $2.14 Friday, down 23% since the company disclosed the latest government inquiry.
In January, Corinthian said it had received a subpoena from the California attorney general’s office related to similar issues.
The company and its rivals in the for-profit college industry have been under scrutiny for years by federal and state officials over recruitment practices and high loan default rates among students.
Founded in 1995, Corinthian operates 113 college campuses in the U.S. and Canada under the names Everest, Heald and WyoTech in addition to offering degrees online.
The for-profit education industry boomed during the recession, but enrollment has slipped amid improving job prospects in the economy and continued government scrutiny of high student debt.
At the end of March, Corinthian said its student population was 87,776, down 6% from the same period a year ago. In response, the company has sought to cut some tuition rates to make degrees more affordable.
Forty-three percent of the company’s enrollment is in healthcare programs, 23% are studying business and 9% are in mechanical and other trades, according to the company.
Overall, company revenue for the most recent fiscal year declined 10% to $1.6 billion.
Corinthian has also been in a dispute with the U.S. Department of Education that relates to student access to federal loans.
Last year, the Education Department gave Corinthian a “financial responsibility score” below the government’s minimum requirement. Corinthian has appealed that decision, and it said earlier that no final determination has been made.
In April, Corinthian added two high-profile board members. They are former Defense Secretary Leon Panetta and Marc Morial, former New Orleans mayor and chief executive of the National Urban League.
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