The SEC has announced fraud charges against the CEO and CFO of for-profit college ITT Educational Services.
And now shares of ITT are crashing.
In early trade on Tuesday, shares of ITT were down as much as 8% after the SEC announced charges against ITT CEO Kevin Modany and CFO Daniel Fitzpatrick for concealing the performance of some student loans guaranteed by the company from investors.
In a release, the SEC said:
The SEC alleges that the national operator of for-profit colleges and the two executives fraudulently concealed from ITT’s investors the poor performance and looming financial impact of two student loan programs that ITT financially guaranteed. ITT formed both of these student loan programs, known as the “PEAKS” and “CUSO” programs, to provide off-balance sheet loans for ITT’s students following the collapse of the private student loan market. To induce others to finance these risky loans, ITT provided a guarantee that limited any risk of loss from the student loan pools.
More to come …