SEC Charges National Operator of For-Profit Colleges with Fraud

The SEC announced fraud charges against ITT Educational Services, Inc. ("ITT"), as well as its chief executive and financial officers.

According to the SEC, national operator of for-profit colleges ITT and its two executives fraudulently concealed from its investors the poor performance and "looming financial impact" of two student loan programs that ITT guaranteed financially. The SEC alleges that ITT formed both of these student loan programs to provide off-balance sheet loans for ITT's students following the collapse of the private student loan market.

According to the SEC, ITT induced others to finance these loans by providing a guarantee that limited any risk of loss from the student loan pools.

See:SEC Complaint; SEC Press Release. Related news: Flawed Math on Student Loans (with Lofchie Comment) (May 5, 2015).