Legal News

Rising From Ashes of Jury Verdict, Apollo Group Wins Huge Reversal

By Dan Slater

Back in June, the WSJ reported on the relatively rare phenomenon of companies taking class-action shareholder suits all the way to trial; JDS Uniphase is one of a handful that have won.

Now it looks as though the Apollo Group can also claim that rare distinction. Yesterday, Apollo, owner of the for-profit University of Phoenix, persuaded a judge to throw out a $277 million securities-fraud verdict over the company’s failure to disclose a report criticizing the school’s operations. Here’s the order from U.S. District Judge James A. Teilborg in Phoenix. And here’s a Bloomberg report.

Judge Teilborg ruled that Apollo stockholders couldn’t show their losses were caused by ex-CEO Todd Nelson’s withholding of a U.S. Education Department report that accused the company of violating a federal ban on paying staff on the basis of enrollment numbers.

“Securities laws are not insurance to protect against economic losses,” Teilborg said at a hearing in federal court in Phoenix. Stephen Basser, a lawyer for Apollo investors, said they’ll appeal the judge’s decision.

Full post as published by Law Blog - WSJ.com on August 05, 2008 (boomark / email).