On April 27, 2012 the article : Insider trading probe at University of Phoenix: Washington Post Company stock sales also seen as suspect http://www.dailycensored.com/2012/05/04/insider-trading-probe-at-university-of-phoenix-washington-post-company-stock-sales-also-seen-as-suspect-2/ reported (http://www.dailycensored.com/2012/04/27/insider-trading-probe-at-university-of-phoenix-washington-post-company-stock-sales-also-seen-as-suspect/) that Apollo Group, the parent company of University of Phoenix, was under investigation by the SEC for possible unlawful insider trading activities.
The article also reported on several large multi million dollar insider stock sales by the Graham family at the Washington Post Company (which owns Kaplan University) which took place days before large declines in stock price.
The article was reposted on May 4 , 2012 after the website was hacked and the article disappeared from Google results
UPDATE # 1 ASHFORD UNIVERSITY
ecampusnews.com reported om July 17, 2012 that Ashford University’s parent company is being sued by shareholders alleging they engaged in an elaborate insider trading scheme along with violations of financial filings with the federal government. This comes on the heels of Ashford’s loss of accreditation by the accrediting body, The Western Association of Schools and Colleges (WASC) http://www.ecampusnews.com/business-news/online-for-profit-college-faces-accreditation-rejection-shareholder-lawsuit/
The claims against Ashford ‘s parent company are typical of the casino culture which permeates the for profit college industry. An industry characterized by executive compensation measured in tens of millions of dollars. An industry which spends more on marketing than on instructional costs.
UPDATE #2 Washington Post Company
According to the article “The Washington Post Co.’s Self-Destructive Course”, by Ryan Chittum published on May 11, 2012 the Washington Post Company has been draining the company of money and resources by engaging in dividend payouts and stock buybacks which benefit the Graham family .
According to the article:
“The company as a whole is still profitable and has earned a total of $546 million since the start of 2008, when the financial crisis began in earnest. But in that same time it has spent more than twice that—$1.1 billion—on buybacks and divi-dends that have helped put a floor under its share price (and its earnings per share).
Much of that money is being squandered to appease the short-term interests and cash needs of shareholders, who very much include the Graham family, which controls the voting shares of the Post.
While the company has been bleeding revenue and income in the last year-plus, it has actually been increasing the amount of cash it pays out in dividends. Last year, it paid a $9.40 dividend for each share—a total cash payout of $75.5 million to shareholders. It has raised its dividend in nine of the last ten years for a total increase of 69 percent…
This is like some kind of recurring nightmare for iconic American newspaper brands. It was only five years ago that Audit Chief Dean Starkman wrote this about Dow Jones, The Wall Street Journal’s publisher, which was bled dry by decades of dividend demands from the feckless Bancroft family”.
While the company has been throwing cash at shareholders, it has been gutting the Post’s legendary—and critically important—newsroom, which, after the current round of buyouts and/or layoffs, will be a bit more than half what it used to be. This latest round of buyouts could reduce the investigative staff from seven to four.
What Chittum failed to report was that between 2008 and 2011, while CEO Don Graham was engaging in $1.1 billion in dividend payments and stock buybacks, his family sold about $80 million in stock, benefiting from the increased stock price resulting from the buybacks.
While Don Graham used company money to pump up the stock price and his family cashed out, new investors were unwittingly purchasing stock at prices which had been inflated by the company. The most notable beneficiaries of this were the Graham family and Warren Buffet, who together control about 35- 40% of all stock.
Unfortunately shareholders have no recourse to get to the bottom of all this other than lawsuit because The Washington Post company has been structured so CEO Don Graham controls the entire board of directors . The Washington Post Company has been set up as a dual share class company. Even though the Graham family only owns about 15% of company stock, Don Graham controls 85% of Class A shares, which elect 70% of the board of directors.
Class B shareholders own about 85% of stock, but only elect 3 Board members. Warren Buffet owns about 25% of class B shares, and has turned over his voting rights for these to Donald Graham, therefore Mr. Graham in effect controls the entire board, and runs the publicly traded company as his own personal fiefdom.
As sole controller of the board of directors, Don Graham has appointed himself Chairman of the Board and hired himself as CEO, and has been issuing the dividends and stock buybacks, which benefit himself, his family and Mr. Buffet. While this may not be illegal it sure seems like a conflict of interest.
In some fiscal quarters, Mr. Graham has been issuing dividend payouts which exceeded quarterly earnings. For example, Reuters reported on Jan 20, 2011 that the Washington Post Company was increasing dividends from $9.00 to $9.40 / share and paying a quarterly dividend of $2.35 / share, even though the earnings per share in the first quarter of 2011 were $1.87 / share.
And quarterly dividends have been issued while employees have been downsized. For example Reuters reported on Feb 8, 2012 The Post was offering voluntary buyouts to newsroom staff, and on Feb 23, 2012 Reuters reported that the Post Company was issuing a quarterly dividend of $2.45 a share
Graham has also been engaging in nepotism which may run contrary to the interests of shareholders. He has appointed niece, Katharine Weymouth, publisher of the newspaper and a director of the company. One of her first acts was the scandal known as Salongate. And Graham has appointed his daughter Laura O’shaughnessy as CEO of the Post’s Social Code company.
The net result of Don Graham’s total control of the board, dividend payouts, stock buybacks and nepotism? As Chittum reported, declining revenues and income, and a gutting of the flagship newspaper. On May 21, 2012 WSJ reported that S&P lowered its outlook on the Post Company to negative. And as Reuters reported on July 11. 2012 Moody’s placed Washington Post’s A3 rating on review for downgrade.