Grand Canyon Education (LOPE) agreed to settle $25.5M with shareholders to end claims over Grand Canyon University spin-off.
Back in 2019, Grand Canyon Education was accused of secretly managing Grand Canyon University while falsely claiming that GCU was a separate, independent non-profit organisation. Following the disclosure, $LOPE significantly fell, and GCE faced a lawsuit from investors.
September 9, 2019: Citron Research published "GCE is the Educational Enron", accusing GCE of financial manipulation.
November 6, 2019: GCE received a letter from the DOE denying GCU’s non-profit status.
November 7, 2019: After this became public, $LOPE fell 4%.
January 28, 2020: Citron Research published another report accusing GCE of financial issues. GCE’s stock dropped 8%.
May 12, 2020: GCE faced a lawsuit from investors.
In July 2018, Grand Canyon Education announced that Grand Canyon University would become a separate non-profit organisation and that GCE would provide services to it.
However, in September 2019, Citron Research published a report titled "GCE is the Educational Enron," accusing GCE of financial manipulation.
The report claimed that Grand Canyon was using a "captive non-reporting subsidiary" to “dump expenses and liabilities while receiving a disproportionate amount of revenue at inflated margins in order to artificially inflate the stock price”.
On November 6, 2019, GCE received a letter from the DOE denying GCU’s application for non-profit status. This denial indicated that GCU was not operating independently as a non-profit.
On November 7, 2019, after the DOE's letter became public, $LOPE declined by 4%.
In January 2020, Citron Research released another report stating that Grand Canyon University was still controlled by Grand Canyon Education. Following this report, $LOPE dropped 8%.
After these reports, in May 2020, the City of Hialeah Employees' Retirement System filed a lawsuit against GCE, alleging that the company had misled investors about GCU's non-profit status and its financial practices.
What can investors expect now?
Grand Canyon Education (LOPE) agreed to settle $25.5M with shareholders to end claims over Grand Canyon University spin-off.
If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section below.