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Posted on Sun, Jul 31, 2011 : 1:37 p.m.

Washtenaw County pension fund sues Princeton Review for securities fraud

By AnnArbor.com Staff

A retirement fund for Washtenaw County employees filed suit against The Princeton Review Inc. last week, alleging securities fraud, according to a report on from Bloomberg.

The lawsuit, filed in a Massachusetts federal court, claims misleading filings in a 2010 stock offering, the report says.

The initial public in 2010 offering generated $48 million, according to the report, but the value fell from $3 per share to less than 50 cents a year later after losses during 2010 were reported.

Bloomberg reports that the Washtenaw County Employees Retirement System is seeking class action status. Read the full report.

Comments

Jack

Tue, Aug 2, 2011 : 12:14 a.m.

"The initial public in 2010 offering"? Come on, do a little proofing.

Peter Eckstein

Mon, Aug 1, 2011 : 3:17 p.m.

1) This is too big and interesting a story for us to have to read about it entirely through Bloomberg. Let's see some energetic local reporting. The county is taking a major action, and we should be told the background and the reasons. When did the county invest, how much did it invest, how much did it lose? What were the assurances given on the basis of which the investment was made? Is this part of a class action or a potential class action? What do county officials (or ex-officials) say about it? 2) I know nothing about the specifics of this case, but in general there are not enough private and governmental actions against corporations that cook their books and lie about their prospects.

al

Mon, Aug 1, 2011 : 3:41 a.m.

If the Princeton Review loses the suit, I'm not sure it will really matter anymore where they rank anybody at anything.

pseudo

Mon, Aug 1, 2011 : 12:07 a.m.

Sorry - read this wrong - Its still incredibly I ironic that the County where the U is did the purchasing. Questions remain the same - what did the county think it was buying? and how will The Princeton Review rate the U based on the law suit from the county?

JAC

Mon, Aug 1, 2011 : 4:02 a.m.

I don't sense even that irony. If it were Wayne county, would it be ironic? That county has several universities and I don't see how that would be ironic either. Regardless, is there any indication of how much the county's pension fund lost? And why there weren't controls in place to stem those losses?

pseudo

Mon, Aug 1, 2011 : 12:05 a.m.

I LOVE the irony of this story. A company that makes its money by giving paid tutoring specifically for the tests the U uses to measure applicants against one another! Better yet, it is also a company that also ranks schools...this is funny stuff. Makes me wonder what the U was trying to buy. I agree that investment involves risk - but risk is measured by the financial reporting as required for publicly traded companies. If the Princeton Review violated those terms and the damages are measurable (as they are in this case) then suing is entirely appropriate. How ironic can this be? How will The Princeton Review rate the U of M given the law suit?

bhall

Mon, Aug 1, 2011 : 3 a.m.

Not sure there's any irony to speak of. The U-of-M is not a party to this lawsuit and isn't involved in any way.

Sallyxyz

Sun, Jul 31, 2011 : 10:33 p.m.

Correct me if I'm wrong, but investing involves risk, and any investment can lose value. I'm not sure that an IPO is the best place to invest a county's pension fund in any case. IPO's are risky by definition as well as volatile, and pension funds should be invested in more conservative funds, so if they lose value (and all funds go up and down with the market), there will be less risk. There may in fact be misleading claims made by Princeton Review, but I question investing a pension fund in any IPO. Whoever was in charge of the investments for Washtenaw County's pension fund should have watched this investment more carefully given the risk of an IPO and bailed out much sooner. Set your stop loss to 10% or 15% and stick to it. No one in charge of a pension fund's assets should allow a loss of 61% on any fund or stock (as stated in the Bloomberg article: a drop of 37.8% + 23.5% the next day).

EyeHeartA2

Mon, Aug 1, 2011 : 1:54 p.m.

Even the Bloomberg article is sketchy on details, but there are certain laws that must be adhered to with respect to financial statements and so on. If they lied, then they leave themselves open to litigation.

Craig Lounsbury

Sun, Jul 31, 2011 : 11:34 p.m.

I agree with much of what you said, but this wasn't actually an IPO. This was a secondary offering of additional stock. The IPO happened in June of 2001. So there was a 10 year track record to draw from. IMO it was screaming do not invest.

Craig Lounsbury

Sun, Jul 31, 2011 : 8:28 p.m.

maybe they should try suing the guy(s)/gal(s) who though it was a good idea to buy a stock trading at its all time lows on an 18 month down hill run that had blown through 10 year support levels. Looking at a 10 year chart of that stock in April of 2010 it screams one of two things.... 1. stay away from me 2. short me because theres no longer an end in site to my downhill run. the one thing those charts didn't say was "buy me."