Washington Post Faces Kaplan Lawsuit
NEW YORK (
) --
The Washington Post
(WPO)
is facing a lawsuit seeking class action status for investors who purchased shares between July 31, 2009 and August 13, 2010.
A suit filed by the Izard Nobel law firm in U.S. District Court for the District of Columbia alleges that the Washington Post, and its for-profit educational institution subsidiary Kaplan, violated several federal securities laws. The company allegedly failed to disclose that it had engaged in deceptive recruiting and financial aid lending practices. The company is accused of failing to "maintain proper internal controls,"
according to the complaint
. The complaint also alleges that the company didn't make it clear that its programs risked losing their federal financial aid eligibility.
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The U.S. Department of Education plans to set new regulations that require for-profit institutions to better prepare students for "gainful employment" or they run the risk of losing access to federal student aid. The new rules also restrict incentive-based recruiting practices.
"These new rules will help ensure that students are getting from schools what they pay for: solid preparation for a good job," Secretary of Education Arne Duncan said.
The rules will go into effect in the middle of next year, in time for the fall 2011 semester.
The Education Department proposed these new regulations after a September report showed the national default rate had risen to 7% in 2008, up from the 2007 rate of 6.7%. The default rate for for-profit schools saw the biggest gain, up to 11.6% from 11%.
Then on August 13 it released data on that showed the repayment rate at Washington Post's Kaplan University was just 27%.
Izard Nobel says that any members of the class interested in requesting to be appointed a lead plaintiff of the class should visit its Web site for more information and must submit the request no later than December 27, 2010.
Washington Post stock is down less than 1% today to below $400. The company is scheduled to release its third quarter financial report on November 5.
-- Written by Theresa McCabe in Boston.
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