For-Profit School CECO Plunges 16% on Dept. of Ed Memo

For-profit stocks are taking it on the chin this afternoon, as a memo from the Department of Education circulates taking to task the way $2 billion (market cap) Career Education (CECO) claimed credit hours for its students at American InterContinental University, which has campuses in Atlanta and Dallas, among others.

The memo says the Higher Learning Commission’s decision to accredit AIU was “not in the best interests of students” and requests that the government’s Office of Postsecondary Education look into the matter. Several swaths of the text are blacked out in the memo.

Shares of CECO have plunged this afternoon, down $4.60, or 16%, at $23.75, and picking up steam.

The FlyOntheWall notes this afternoon that volume in Put options on CECO is about 4 times as high as Call options, indicating people are hedging downside risk in a big way at this moment.

Apollo Group (APOL) is off $2.86, or 4.7%, at $57.59, and Bridgepoint Education (BPI) is off $1.40, or 8%, at $16.