Education Management Corp. Investor Files Lawsuit

SEPTEMBER 2011 - Lawsuit claiming that Education Management Corp. underwrote the company's 2009 initial public offering was dismissed. It was determined the shareholders had failed to develop any evidence that any company official or underwriter had lied to investors or that the drop in EDMC's stock value in August 2010 was driven by anything other than a general drop in stock value for all for-profit education companies. Shareholders also can't base their lawsuit on claims the federal government and a growing number of states make in a separate lawsuit, which seeks to recover more than $11 billion in state and federal aid funds.

AUGUST 2010 - An investor in EDMC shares filed a lawsuit in the United States District Court for the Western District of Pennsylvania, on behalf of purchasers of the common stock of Education Management Corp (NASDAQ:EDMC) between October 2, 2009 and August 3, 2010, against Education Management Corporation over alleged violations of Federal Securities Laws.

Education Management Corp., located in Pittsburgh, PA, is a provider of post secondary education in North America, with approximately 96,000 active students as of October 2007. Education Management Corp.offers education through four different education systems, The Art Institutes, Argosy University, the Brown Mackie Colleges and South University.

According to the complaint the plaintiff alleges that Education Management Corp (NASDAQ:EDMC) and certain of its Officers violated the Securities Exchange Act of 1934 by issuing a series of materially false and misleading statements related to its business and operations, and violated the Securities Act of 1933 by issuing a materially false and misleading registration statement and proxy-prospectus in connection with the October 2, 2009 Initial Public Offering.

On August 4, 2010, the Senate Health, Education, Labor, and Pensions Committee conducted a hearing on for-profit education firms, where Government Accountability Office representative, George Kutz, presented the findings of report GAO-10-948T, "For-Profit Colleges: Undercover Testing Finds Colleges Encouraged Fraud in Deceptive and Questionable Marketing Practices." The report detailed undercover investigations into 15 for-profit schools that uncovered misconduct by school staff. According to this GAO study, the college personnel at schools owned by Education Management Corp. may have encouraged applicants to falsify their financial aid forms to qualify for federal aid and pressured applicants to sign a contract for enrollment prior to allowing them to speak to a financial advisor. During the U.S. Senate Health, Education, Labor, and Pensions Committee hearing, GAO representative George Kutz identified Argosy University as one of the schools subject to the investigation. As an apparent result of this report, so the investigation, Education Management's stock dropped to a fifty-two week low. Shares of Education Management Corp (NASDAQ:EDMC) traded recently at $12.76 per share, down from its 52weekHigh of $26.98 per share and almost $43 per share during 2006.