A group of shareholders who lost money when a Downtown, for-profit educator's stock plummeted in 2010 failed to provide enough evidence to pursue a claim that they were defrauded, a federal judge ruled today in dismissing their lawsuit.
The shareholders claimed that Education Management Corp., several of its officers and the financial institutions who underwrote the company's 2009 initial public offering misled investors about the source of the company's growth.
U.S. District Judge Nora Barry Fischer adopted a report filed by U.S. Magistrate Judge Robert C. Mitchell that determined the shareholders had failed to develop any evidence that any company official or underwriter had lied to investors or that the drop in EDMC's stock value in August 2010 was driven by anything other than a general drop in stock value for all for-profit education companies.
Fischer also agreed with Mitchell that the shareholders can't base their lawsuit on claims the federal government and a growing number of states make in a separate lawsuit, which seeks to recover more than $11 billion in state and federal aid funds.
The federal and state governments' lawsuit claims the company paid its recruiters solely based on the number of students they persuaded to enroll in EDMC's 101 schools. EDMC, whose schools including the Art Institute of Pittsburgh, denies it has improperly paid its recruiters.
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.