The Phoenix Rises

By Jordan DiPietro | More Articles
December 14, 2009 | Comments (0)

Shares of Apollo Group (NYSE: APOL ) , which provides educational services and resources at its campus locations, learning centers, and online, rose by more than 8% today on litigation news. Apparently, the educator settled a lawsuit against two whistle-blowing former employees who had complained about Apollo's payment practices.

According to Bloomberg:

Apollo said in October it expected to pay about $80.5 million to settle the 2003 federal lawsuit brought by two former employees who alleged the company violated a federal ban on paying recruiters on the basis of the number of students enrolled. Apollo paid $9.8 million in 2004 to the Department of Education to settle similar allegations.

Apollo operates the University of Phoenix, the nation's largest for-profit college, with more than 440,000 students. Competitors such as Career Education (Nasdaq: CECO ) , DeVry (NYSE: DV ) , and ITT Educational Services (NYSE: ESI ) all saw a nice bump in share price on the back of Apollo's news.

Do you think the settlement was grounds for today's exuberance around for-profit colleges? Sure, some uncertainty has been removed about how the Department of Education would handle the case, but the final settlement apparently was significantly higher than 2004's tally. Sound off in the comments area below!

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Fool contributor Jordan DiPietro owns shares of The Apollo Group, which is a Motley Fool Inside Value selection. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy has a doctorate in transparency.

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