K-12 Settles One Lawsuit, and Another is Filed, and Then Another

K12, Inc. faces multiple lawsuits filed by shareholders angry after being misled by the company about its academic performance, its teacher-student ratios and its enrollment declines.

On July 25th, 2013, the US District court for Eastern District of Virginia approved a settlement in a stockholder class action lawsuit against K-12, Inc. The company agreed to pay its stockholders $6.2 million because they had been “misled by the company’s business practices and academic performance.”

K12 Suit

The lawsuit:  “alleged that the company misled shareholders by overstK12 Suit 2ating its academic performance, and by not providing accurate information about student-to-teacher ratios and how students are recruited”

Then in April of 2014 a second stockholder class action lawsuit was filed in the same US District Court, charging K12, Inc with:

misleading investors by putting forward overly positive public statements during much of last year, only later to reveal that it had missed key operational and financial targets.

The lawsuit also alleges that former K12 CEO Ronald J. Packard “reaped the rewards” of the bullish company projections by selling millions of dollars worth of stock in the months before an October announcement of disappointing news sent its stock price plummeting.

Packard resigned in January 2014.

A third lawsuit was filed by the Oklahoma Firefighters Pension and Retirement System. It cites optimistic statements made throughout 2013 by company officials, including Packard and Nathaniel A. Davis, K12’s current CEO, about the company’s ability to grow.

But in an Oct. 8 statement filed with the SEC, K12 said that its fiscal 2014 revenue guidance was lower than expectations and that enrollment of students was also lower than expected.

Following those revelations, the company’s stock fell by 38 percent, to an eight-month low of $17.60, on Oct. 9, according to the lawsuit. As a result, the plaintiffs say they absorbed “significant investor losses.”

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1 Response to K-12 Settles One Lawsuit, and Another is Filed, and Then Another

  1. Pingback: And Now Another Word from Our Sponsor, K12 | EduShyster

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