July 25, 2014

The United States District Court for the Southern District of New York on July 22, 2014, upheld allegations of securities fraud against ITT Educational Services, Inc. (“ITT”), a for-profit educational institution with campuses throughout the country, for issuing false and misleading statements regarding the company’s liabilities and exposure under guarantees entered into with third party lenders in order to obtain private student loan funding for ITT’s students. 

In the opinion upholding Plaintiffs’ claims, and denying defendants’ motion to dismiss in substantial part, Judge J. Paul Oetken carefully analyzed each set of false and misleading statements and evaluated Plaintiffs’ scienter allegations holistically, noting that while “[s]ecurities plaintiffs need not plead facts ‘of the smoking-gun genre’ to be entitled to relief . . . . Plaintiffs here have done just that.”  The Court further emphasized the strength of Plaintiffs’ claims, explaining that in weighing the competing inferences of culpable versus innocent conduct on behalf of the defendants, “it is clear” that the culpable inference overtook the innocent one. 

Lead Counsel Carol Gilden, a partner at Cohen Milstein Sellers & Toll PLLC, said, “We are pleased with the Judge’s ruling.  It parsed out the alleged wrongdoing and sustained the heart of the Plaintiffs’ claims.  We will continue to vigorously litigate the case.”

Cohen Milstein serves as lead counsel in the consolidated class action, representing lead plaintiffs, the Plumbers and Pipefitters National Pension Fund and Metropolitan Water Reclamation District Retirement Fund, and the proposed class of purchasers of ITT common stock (NYSE: ESI) during the Class Period, April 24, 2008 to February 25, 2103.  The second consolidated class action complaint, filed in January 2014, asserts claims under Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 against ITT, the Company’s Chief Executive Officer, Kevin Modany, and the Company’s Chief Financial Officer, Daniel Fitzpatrick.

Cohen Milstein counsel Carol V. Gilden and Douglas S. Bunch represent the lead plaintiffs in this action. The case is In re ITT Educational Services, Inc. Securities Litigation, 1:13-CV-1620 (S.D.N.Y.).
For more information, contact Carol Gilden, Cohen Milstein Sellers & Toll PLLC, at cgilden@cohenmilstein.com or 312-357-0370.

Order - July 22, 2014