Corinthian Exonerated

Shareholders of for-profit educator Corinthian Colleges (Nasdaq: COCO  ) got a very late Christmas present yesterday -- but they aren't complaining. Crying a bit, yes, but those are tears of joy.

In the briefest of brief press releases, Corinthian announced yesterday morning that the Securities and Exchange Commission has ended its investigation of the company and does not intend to take any enforcement action. The SEC had been investigating Corinthian for possible violations of securities laws related to its communications with analysts and investors in fiscal 2004. It was also looking into the facts underlying a U.S. Department of Education investigation of one of the educator's branch campuses. With the Department of Education having closed its investigation last September, the SEC's decision removes the last pending regulatory threat to the company.

Some private class-action lawsuits, though, are still pending against Corinthian. But those suits primarily concern the same alleged violations that the SEC and the Department of Education have now decided didn't exist, so the suits should now melt away, too.

Combined, yesterday's news and its implications for the lawsuits helped to drive up Corinthian's stock up as much as 18% before the enthusiasm tempered and the stock receded. But it still closed the day up 10%. Corinthian's good news helped to buoy its for-profit educational peers, although some ended up in the red at day's end, including Apollo Group (Nasdaq: APOL  ) , which initially rose before falling along with educators Career Education (Nasdaq: CECO  ) and Strayer (Nasdaq: STRA  ) .

Education companies that managed to follow Corinthian up and stay up included fellow SEC probe targetITT (NYSE: ESI  ) , which ended the day up about 1.4%, and DeVry (NYSE: DV  ) and Laureate (Nasdaq: LAUR  ) , both up about 1.1%.

Read more about Corinthian's historic legal woes, and study in anticipation of its earnings release, scheduled for this Thursday, with:

• Rich Smith's reviews of Corinthian's Q1 2005, fiscal 2004, and Q3 2004 results.
• Jeff Hwang's review of the company from last year.
• A truly historical gem by Rick Munarriz, from back in 2000.
• And Rich Duprey's take on the for-profit educational industry's legal woes.

Fool contributor Rich Smith has no interest in any of the companies mentioned in this article.