Grand Canyon Education, Inc. Class Action Lawsuit

Case Summary

Company Name
Grand Canyon Education, Inc.
Stock Symbol
Class Period
January 5, 2018 to January 27, 2020
District of Delaware

The Grand Canyon Education, Inc. class action lawsuit charges Grand Canyon Education and certain of its officers with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers of Grand Canyon Education common stock between January 5, 2018 and January 27, 2020 (the “Class Period”).  The Grand Canyon Education class action lawsuit was commenced on May 12, 2020 in the District of Delaware and is captioned The City of Hialeah Employees’ Retirement System v. Grand Canyon Education, Inc., No. 20-cv-00639.

The Grand Canyon Education class action lawsuit concerns Grand Canyon Education’s July 2018 spin-off of its education assets through a sale to purported non-profit entity Grand Canyon University.  Before the spin-off, Grand Canyon Education had owned and operated a for-profit university with a physical campus and through online programs.  But in reality, Grand Canyon University functioned as an off-balance-sheet entity to which Grand Canyon Education was able to funnel expenses and costs in exchange for a disproportionate amount of revenue, thereby inflating Grand Canyon Education’s financial results.  In addition, Grand Canyon University was not a proper non-profit organization, but rather, remained under the control of Grand Canyon Education through a Master Services Agreement and by virtue of Grand Canyon Education’s employees serving as the executives who managed Grand Canyon University.

The truth was revealed in a series of corrective disclosures. First, on September 9, 2019, Citron Research published a report examining Grand Canyon Education’s financials and concluding that Grand Canyon Education “is stuffing [Grand Canyon University] with expenses to inflate its own profitability and as a result [is] bankrupting [Grand Canyon University].”  In response to this disclosure, the price of Grand Canyon Education stock declined approximately 5% on September 9, 2019 to an intraday low of $104.20 per share before closing at $109.62 per share on September 10, 2019.  Then, on November 6, 2019, Grand Canyon Education announced that it had received a letter from the U.S. Department of Education (“DOE”) denying its application to designate Grand Canyon University as a non-profit.  In response to this disclosure, the price of Grand Canyon Education stock declined approximately 4% to close at $88.08 per share on November 7, 2019.

Finally, on January 28, 2020, Citron Research published a second report expanding on the DOE’s findings based on hundreds of pages of supporting documentation from Grand Canyon Education that Citron Research had obtained through a Freedom of Information Act request. Citron Research concluded that Grand Canyon Education was the “educational Enron,” 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.”  Following this disclosure, Grand Canyon Education shares declined approximately 8% to close at $84.07 per share on January 28, 2020.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

Class Period: January 5, 2018 - January 27, 2020
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