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Wild Ride for Corinthian Shares

Trading in the education company is halted briefly, after a 33% plunge because of a market rumor.
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Shares in education company

Corinthian Colleges

(COCO) - Get Vita Coco Company, Inc. Report

fell quickly and furiously on rumors of a civil lawsuit against the company, two days after

reports that a competitor was hit by an employee complaint alleging improper activity.

The company said: "It knows of no events or activities that would warrant any concern in the company's performance." In a statement, it added that "the extraordinary nature of this morning's trading and the subsequent trading halt warranted this assurance to shareholders."

At one point, Corinthian shares were down as much as 33% in trading, 10 times normal volume. The selloff was so swift and vicious that trading was halted and the

Nasdaq

also cancelled all trades of Corinthian shares between 10:46 a.m. and 10:58 a.m. EST. Recently, shares were down $2.29, or 4%, to $55.23.

Corinthian shares had already fallen 17% this week, following news Wednesday that an employee at postsecondary education rival

Career Education

(CECO) - Get Career Education Corporation Report

filed a complaint alleging officials had forged signatures and tampered with student files in an effort to inflate enrollment and company profits.

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The company denies any wrongdoing, but the employee complaint raised questions about what analysts described as a "pressure cooker" work environment at Career Education and an industry with a "culture of growth."

Career Education shares were up slightly Friday, after losing a combined 33% on Wednesday and Thursday.

The Corinthian selloff Friday spread to other companies in the sector;

Apollo

(APOL)

,

Education Management Corp.

(EDMC)

and

University of Phoenix Online

(UOPX)

all fell on the news.

Santa Ana, Calif.-based Corinthian operates 83 colleges and education centers in 21 U.S. states and another 61 colleges and corporate training centers in Canada.