Please refer to pages 2 to 4 for Disclosure Statements, including the Analyst's Certification.
Thursday, December 17, 2009
Corinthian Colleges (Outperform)
Evades Qui-Tam Action
This morning the Chronicle of Higher Education published an article stating that a lawsuit
against COCO relating to recruiter compensation had been dismissed. We believe this refers to
a qui-tam lawsuit, which was dismissed by court order on December 11, 2009. The company
has yet to disclose this.
∗ The lawsuit, (United States of America, ex rel. Nyoka Lee and Talala Mshuja v.
Corinthian Colleges, Inc., et al.) was filed in the Central District of California in 2007
under the False Claims Act, which allows individuals to sue on the government’s behalf
and receive a portion of any damages awarded (i.e., a “qui tam” lawsuit). The government
declined to join in the case.
∗ According to the article in the Chronicle, the lawsuit was dismissed based on the judge’s
finding that COCO’s compensation practices fell within the Department of Education’s 14
“safe harbor” provisions regarding incentive compensation.
∗ As part of the ongoing negotiated rulemaking (“neg-reg”) sessions the ED has proposed
eliminating the safe harbor provisions, although this is still being debated as both not-for-
profit and for-profit representatives have resisted this change.
∗ We believe all three of the qui-tam suits disclosed in COCO’s latest (3Q09) 10Q have
been dismissed (the dismissal of the other two was disclosed in its 3Q09 10Q).
∗ We maintain our OUTPERFORM rating.
Corinthian Colleges (COCO)
Jeffrey M. Silber 212-885-4063
Paul Condra 212-885-4176
Flash • Page 2
BMO Capital Markets
CORINTHIAN COLLEGES INC (COCO)
Last Daily Data Point: December 16, 2009
Quarterly Price (US$)