Banc of America keeps its buy rating on for-profit education provider Career Education (CECO).
Analyst Howard Block says the director of Gibbs College, part of a chain of institutions owned by Career Education, is suing the school for wrongful termination. According to the suit, the director discovered a number of students failed to complete or attend mandatory internships nor complete required courses, yet they were allowed to graduate.
The suit said such falsification was designed to ensure Gibbs would continue to get state and federal funding. Block says the plaintiff allegedly contacted supervisors about her discovery, but they took no action; the plaintiff was fired in June 2003. Blcok says Gibbs' accreditation review is underway, and he thinks the attention surrounding the lawsuit may have implications for Career Education's earnings multiple.