SAN DIEGO & HERNDON, Va.--(BUSINESS WIRE)--Shareholder rights law firm Robbins Arroyo LLP announces that a class action complaint was filed against K12, Inc. (NYSE: LRN) in the U.S. District Court for the Northern District of California. The complaint is brought on behalf of all purchasers of K12 securities between November 7, 2013 and October 27, 2015, for alleged violations of the Securities Exchange Act of 1934 by K12's officers and directors. K12 Inc., a technology-based education company, offers proprietary curriculum, software systems, and educational services to facilitate individualized learning for students primarily in kindergarten through 12th grade.
View this information on the law firm's Shareholder Rights Blog: www.robbinsarroyo.com/shareholders-rights-blog/k12-inc-july-2016
K12 Accused of Lying About The Success Rate of Its Students
According to the complaint, throughout the class period, K12 filed several press releases and submitted multiple filings with the U.S. Securities and Exchange Commission touting the company's business prospects. The company issued a press release on February 4, 2014, stating, "Our Managed Schools are now…using many of the new educational programs we put in place this year which we believe will improve educational outcomes for all engaged families." The company further emphasized that improving academic outcomes is its number one priority and that it would invest in new systems to drive further improvements for its students. However, the complaint alleges that K12 officials failed to disclose that: (1) K12 was publishing misleading advertisements about students' academic progress, parent satisfaction, their graduates' eligibility for University of California and California State University admission, class sizes, the individualized and flexible nature of K12's instruction, hidden costs, and the quality of the materials provided to students; (2) K12 submitted inflated student attendance numbers to the California Department of Education in order to collect additional funding; (3) as a result, K12 was open to potential civil and criminal liability; and (4) the company would likely be forced to end these practices, which would have a negative impact on K12's operations and prospects.
On October 27, 2015, Stanford's Center for Research on Education Outcomes published a study and a related press release about online charter schools, including K12, stating, "Innovative new research suggests that students of online charter schools had significantly weaker academic performance in math and reading, compared with their counterparts in conventional schools." On the same day, K12 reported disappointing first quarter 2016 financial results compared to the same quarter in fiscal year 2015, including revenues of $221.2 million compared to $236.7 million, Earnings Before Interest, Taxes, Depreciation and Amortization of negative $3.9 million compared to $3.7 million, and an operating loss of $20.5 million compared to an operating loss of $13.2 million. On October 27, 2015, K12 disclosed in its Form 10-Q that it received a subpoena from the Attorney General of the State of California, Bureau of Children's Justice in connection with an investigation known as "In the Matter of the Investigation of: For-Profit Virtual Schools." On this news, K12 stock fell over 20% to close at $9.71 per share on October 30, 2015.
K12 Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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