Securities regulators probe EDMC
Education Management Corp. disclosed on Friday that it is under investigation by the Securities and Exchange Commission for possible accounting irregularities.
The Downtown company, which operates post-secondary for-profit schools, received a subpoena on Tuesday from the SEC seeking documents and information related to the corporation's valuation of goodwill and its allowances for bad student loans, according to regulatory filings. It was not clear what period the subpoena covered.
EDMC is the nation's second-largest for-profit educator, with 110 schools in 32 states and Canada, including the Art Institute of Pittsburgh. The company employs 23,000 people, including 2,400 in Pittsburgh.
The company's filing said EDMC intends to cooperate with the investigation. EDMC spokeswoman Jacquelyne Muller did not immediately return calls to her office and cellphone after hours on Friday. SEC spokesman John Nester declined to comment.
EDMC recorded $2.6 billion in goodwill in connection with its 2006 acquisition by private equity firms led by Providence Equity Partners, Goldman Sachs Capital Partners and Leeds Equity Partners, according to securities filings. The company carried $964 million in goodwill on its balance sheet as of Dec. 31. Goodwill is the price, or premium, that is paid for an asset above its true value.
The company's allowance for bad student debt was $19.2 million as of Dec. 31, versus $9.4 million a year earlier. The amounts relate to loans EDMC makes to students to cover tuition and fees they cannot pay from government and private loans.
EDMC has been struggling with declining enrollments for a year, particularly in its online education programs, in the face of the sluggish economy and a reputation tarnished by litigation. Its profit for the October-to-December quarter dropped 51 percent from year-ago levels.
The company faces federal lawsuits by former employees and the Justice Department that seek to recover about $11 billion in federal and state student aid it received. The claimants argue Education Management obtained the money by violating a federal ban on paying recruiters based on the number of students they enrolled. The company denies the claim.
Shares of EDMC closed on Friday at $3.65, down 3 cents.
Thomas Olson is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or email@example.com.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Toyota to invest $50M in driverless technology with Stanford, MIT partnership
- Farmers fear 2nd attack of bird flu
- Bank of New York Mellon computer glitch examined for harm to investors
- Voice-assist technology gets big push toward mainstream vehicles
- Alcoa putting $60M into Upper Burrell tech center expansion
- Is safety impaired when braking makes car shake?
- Trimmer Pilot belies more room, power
- Save big money with comparable model of vehicle
- U.S. adds 173,000 jobs in August, dropping unemployment rate to 5.1 percent
- Idea Foundry CEO Matesic decides which new companies get help from his Pittsburgh business incubator
- Jobs report fails to provide clarity to investors