Ahead Of The Bell: Apollo Shares Sink On SEC Probe

NEW YORK (AP) — Shares of Apollo Group Inc., owner of the University of Phoenix, the biggest for-profit higher education provider in the U.S., fell after the company said the Securities and Exchange Commission had launched an "informal inquiry" into its revenue accounting practices.

Shares tumbled $11, or 15.1 percent, to $61.97 before the start of regular trading.

This is the second time this year the SEC has looked into how Apollo accounts for sales, most of which comes from students' tuition. Federal student loans from the government make up nearly 90 percent of Apollo's tuition income.

In February, the corporate finance division of the SEC said it was looking into Apollo's revenue recognition practices. This new probe comes from the SEC's enforcement unit.

"We plan on cooperating fully with the SEC," said CFO Brian Swartz on a conference call with analysts Tuesday. He added that he did not know the focus of the SEC's inquiry.

The "revenue recognition" issue revolves around how Apollo determines when a student drops out of a class and how much income Apollo can leave on its balance sheet, and for how long.