NEW YORK, NY--(Marketwired - Jan 31, 2014) - Bernstein Litowitz Berger & Grossmann LLP ("BLB&G") today announced that it has filed a securities class action lawsuit on behalf of the Oklahoma Firefighters Pension & Retirement System ("Plaintiff") in the U.S. District Court for the Eastern District of Virginia against K12, Inc. ("K12" or the "Company") (NYSE: LRN) and certain of its senior executives. The action is captioned Oklahoma Firefighters Pension & Ret. Sys. v. K12, Inc., et al., 1:14-cv-00108-AJT-JFA (E.D. Va.), and asserts claims under the Securities Exchange Act of 1934 (the "Exchange Act") on behalf of investors in K12 common stock during the period from March 11, 2013 through October 9, 2013, inclusive (the "Class Period"). A copy of the Complaint can be found on the website for counsel for the Plaintiff at www.blbglaw.com.
The Complaint alleges that Defendants violated the federal securities laws by issuing a series of materially misleading statements and omissions about K12 -- one of the largest private education management organizations in the United States -- regarding its student enrollment and revenue growth prospects for fiscal 2014, including compliance with state regulations governing enrollment. During the Class Period, the Company publically endorsed analysts' consensus estimates for full fiscal 2014 financial guidance and emphasized that K12 was "on track to have one of the best business development years" in the Company's history, which was supposed to "drive even higher growth for fiscal 2014" than in fiscal 2013. Further, the Complaint alleges that Defendants falsely touted K12's "serious" attention to regulatory compliance. These and similar misrepresentations and omissions were made on the Company's quarterly earnings calls and at industry conferences.
On October 8, 2013, after the market closed, the Company alerted investors to the fact that, contrary to Defendants' public representations during the Class Period, K12's growth prospects were limited and impeded by the Company's failure to timely invest in promotional efforts to enroll new students in fiscal 2014. As the Company disclosed at the end of the Class Period, K12's "own promotional program started later than it should have, and drove more applications later in the summer" when it was too late to convert them into student enrollments. In addition, K12's growth prospects were hampered by the Company's failure to consider and adhere to legal compliance requirements affecting student enrollment in fiscal 2014. As the Company further acknowledged, K12 failed to "appropriately" consider increased compliance requirements that were applicable in certain states in the fiscal 2014 enrollment season. On October 8, 2014, K12 filed a Form 8-K with the SEC, which included a press release revealing that K12's actual fiscal 2014 revenue guidance was $905-$925 million -- not the $986.8 million figure endorsed weeks earlier -- because 2014 enrollments were below the levels that investors were told to expect due to critical operational and performance deficiencies at K12's enrollment centers. In response to this disclosure, K12 stock fell significantly, by more than 38%, falling from a closing price of $28.59 on October 8, 2013 to a closing price of $17.60 on October 9, 2013.
The Complaint alleges that Defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder for the false and misleading statements and omissions issued by Defendants during the Class Period. In addition, the Complaint alleges that Defendants Chief Executive Officer Ronald J. Packard, President and Chief Operating Officer Timothy L. Murray, former Chief Financial Officer Harry T. Hawks, and Chief Financial Officer James J. Rhyu violated Section 20(a) of the Exchange Act.
If you wish to serve as Lead Plaintiff for the Class, you must file a motion with the Court no later than 60 days from January 31, 2014. Accordingly, the deadline for filing a motion for appointment as Lead Plaintiff is April 1, 2014. Any member of the proposed Class may move the Court to serve as Lead Plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed Class.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact Avi Josefson of BLB&G at (212) 554-1493, or via e-mail at firstname.lastname@example.org.
Since its founding in 1983, BLB&G has built an international reputation for excellence and integrity. Specializing in securities fraud, corporate governance, shareholders' rights, employment discrimination and civil rights litigation, among other practice areas, BLB&G prosecutes class and private actions on behalf of institutional and individual clients worldwide. Unique among its peers, BLB&G has obtained several of the largest and most significant securities recoveries in history, recovering billions of dollars on behalf of defrauded investors. More information about BLB&G can be found online at www.blbglaw.com.