Washington Post Company (The) (NYSE: WPO) Investor Securities Class Action Lawsuit 10/28/2010

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Company Name(s): 
Washington Post (The)
Case Name: 
Washington Post (The) Shareholder Class Action Lawsuit 10/28/2010
Case Status: 
Case Dismissed
Affected Securities
NYSE: WPO
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
10/28/2010
Class Period Begin: 
07/31/2009
Class Period End: 
08/13/2010
Court of Filing: 
U.S. District Court for the District of Columbia
Deadline To File for Lead: 
12/22/2010
Case Dismissed: 
03/19/2013
Summary: 

March 19, 2013 - The court granted the defendants' motion to dismiss with prejudice.

May 11, 2012 - The defendants filed a motion to dismiss.

March 13, 2012 - The lead plaintiff filed an amended complaint.

August 26, 2011 - The defendants filed a motion to dismiss.

June 24, 2011 - The lead plaintiff filed a consolidated complaint.

April 21, 2011 - The lead plaintiff and lead counsel were appointed.

December 27, 2010 - A lead plaintiff motion was filed.

October 28, 2010 - An investor in shares of Washington Post Company (The) (NYSE:WPO) filed a lawsuit in the U.S. District Court for the District of Columbia against Washington Post Company (The) over alleged violations of Federal Securities Laws.

According to the complaint the plaintiff alleges on behalf of purchasers of the common stock of Washington Post Company (The) between July 31, 2009 and August 13, 2010, that Washington Post Company and certain of its officers and executives violated the Securities Exchange Act of 1934 by issuing between July 31, 2009 and August 13, 2010 materially false and misleading statements regarding its business and financial results. The Washington Post Company reported increased Revenue over the past four years. The Washington Post Company reported in 2006 Total Revenue of $3.90493billion, in 2007 $4.18041billion, in 2008 $4.46158billion, and in 2009 $4.56973billion. Its Net Income on the other hand decreases from $324.46million in 2006, to $288.61million in 2007, and $92.77million in 2009.

The lawsuit by investors follows a report of the U.S. Government Accountability Office (“GAO”) titled “Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and Questionable Marketing Practices”, which detailed undercover investigations into 15 for-profit schools that uncovered misconduct by school staff. According to this GAO study, the college personnel at schools 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. The undercover tests at 15 for-profit colleges found that 4 colleges encouraged fraudulent practices and that all 15 made deceptive or otherwise questionable statements to GAO’s undercover applicants. In particular, so the report, admissions or financial aid representatives at all 15 for-profit colleges provided our undercover applicants with deceptive or otherwise questionable statements, which included information about the college’s accreditation, graduation rates and its student’s prospective employment and salary qualifications, duration and cost of the program, or financial aid. Representatives at schools also employed hard-sell sales and marketing techniques to encourage students to enroll, so the report.

On August 13, 2010, after the market closed, the U.S. Department of Education released data on federal student-loan repayment rates at the nation's colleges and universities. The data showed that repayment rates were 54% at public colleges and 56% at private non-profit institutions, compared to just 36% at for-profit colleges. Specifically, the data showed that the repayment rate at Washington Post's Kaplan University was just 27%. On this news, so the lawsuit, the price of Washington Post stock dropped 8.10%, or $27.83 per share, from a closing price of $343.48 per share on August 13, 2010 to a closing price of $315.65 per share on August 16, 2010. Washington Post (WPO) shares traded in 2006 and 2007 as high as $800 per share, but then declined in 2008 to as low as $339.50 per share in November 2008. WPO shares lost more than 50% in 2008 and continued to lose value during 2009, before improving in 2010 to over $540 per share in April. Since then shares of the Washington Post (WPO) again lost substantially and traded recently at $381.72 per share, more than 30% less stock value than in April 2010.

Recently the Attorney General of Florida Bill McCollum had launched an investigation into some for-profit education companies, including Washington Post Co.'s (WPO) Kaplan Inc.