Laureate Education, Inc., the for-profit educational company which is closely linked to the Clintons, was met with little enthusiasm in its first day on the stock market.
The company had high hopes of reducing a $4 billion debt when it put its Initial Public Offering (IPO) on the market Wednesday.
The Daily Caller reports it was apparent on Tuesday that Laureate was in jeopardy of raising its projected figure when it struggled to reach a $17 to $20 price target.
As for opening day on Wednesday, the IPO “went as low at $12.46 and closed at $13.25,” says the report.
It was also a negative sign when the company failed to get early orders before going public. Founder and President of StreetInsider, Lon Juricic, told reporters, “There was no appetite for this stock. It looked ugly today.”
Juricic added, “There’s just a lot of questions about the company; the private owners, they’re liquidating it. Investors don’t like its big debt. People don’t like these deals.”
It is also believed that investors considered how the educational firm has a heavy presence overseas, namely in Latin America.
It was discovered that the firm donated $5 million to the Clinton Foundation. It had also been reported that Laureate, Inc. had a history with the Clintons dating back to 2010 when it paid Bill Clinton $16.5 million as its “honorary chancellor” for five years, which the firm is said to have disclosed to the Securities and Exchange Commission (SEC).
According to the report, “During Hillary Clinton’s tenure, the Department of State’s U.S. Agency for International Development awarded $55 million to the International Youth Foundation (IYF), which is linked to Laureate and is chaired by Becker.”
Controversy swirled around the Laureate-Clinton connection this past July in letter sent to IRS Commissioner John Koskinen by 64 Republican members of the U.S. House of Representatives, citing that the organization’s association to the Clintons created “an appearance that millions of dollars in taxpayer money was channeled to IYF by Secretary Clinton’s State Department as a kickback for her husband’s generous contract as an honorary Laureate chancellor.” In response, Koskinen referred the case to the federal tax agency.
However, it was determined that the company did not report the IRS referral or congressional concerns which is required of firms planning IPOs to disclose potential “risk factors” to investors.
Failing to disclose the IRS review was a big reason as to why the firm’s IPO’s performance Wednesday as “a complete disaster,” said Donald Dion, attorney-owner and chief investment officer of DRD Investments. He added, “We look at every risk problem. You list everything. When you don’t list materially significant problems, you invite the plaintiff’s bar to get involved.”
[Laureate] also hinted in its filing it could face Justice Department prosecution under the Foreign False Claims Act concerning Title IV of rules set down by the U.S. Department of Education.
Under federal rules, company employees at for-profit schools are not supposed to be awarded commissions based on the number of students they enrolled. However, Laureate hinted in its filing that violations may have occurred.
H/T: The Daily Caller
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