A team of Goodwin securities litigators achieved a significant victory for Apollo Group, the operator of the University of Phoenix, when an Arizona federal judge dismissed a securities class action alleging that the company failed to disclose its use of improper recruiting practices which purportedly artificially inflated its growth, and engaged in improper accounting practices.
The suit, filed in April 2011, was criticized by Apollo for lacking even the basic requirements for alleging fraud. “Instead of presenting a coherent theory of fraud, the [suit] reads like a polemic against the proprietary education industry,” Apollo wrote in its motion to dismiss. “While everyone is entitled to an opinion, those expressed in the [complaint] have little to do with securities fraud.”
U.S. District Judge James A. Tielborg agreed, writing that the plaintiffs failed to “plead a cogent and compelling theory” of intent to defraud and “made little attempt to link facts indicating actual knowledge on the part of each defendant to actual fraudulent practices.”