Whitney Information Network Inc. may have misled investors about its business operations and financial condition allowing its founder the opportunity to sell millions of dollars of common stock at artificially inflated prices.
Insider Selling/Undisclosed Related Party Transactions
Product or Service
This is a securities fraud class action lawsuit against Whitney Information Network Inc. seeking damages for violations of federal securities laws on behalf of all investors who acquired Whitney stock from November 18, 2003 through and including December 15, 2006 (the "Class Period").
Based in Cape Coral, Florida, Whitney is a post secondary education company that offers financial and real estate investing courses.
The class action lawsuit claims that Whitney, its Chief Executive Officer and its former Chief Operating Officer issued false and misleading statements to the investing public. Specifically, the lawsuit alleges that Whitney issued a series of false and misleading statements, emphasizing the success of numerous acquisitions of related companies, as well as the efficacy of Whitney's marketing programs.
Capitalizing on the rapid increase in Whitney's stock price resulting from these positive announcements, Whitney completed a private placement of Whitney stock in December 2005, in which defendant Whitney sold 1.25 million of his own holdings for proceeds of over $5.6 million.
The class action complaint further alleges that between November 21, 2006 and December 15, 2006, the truth concerning Whitney and its fraudulent business practices began to surface. On November 21, 2006, Whitney revealed that the Securities and Exchange Commission had begun an investigation to determine whether Whitney violated any securities laws in connection with:
(a) the efficacy or trading success of the Whitney's stock market education programs; and
(b) Whitney's acquisition of certain other companies.
Then, on December 15, 2006, it was revealed that the United States Attorney for the Eastern District of Virginia had launched a grand jury investigation into the marketing activities of Whitney, stretching back to 2002. A few days later, it was announced that defendant Maturo as well as Whitney's Vice President of Sales had "departed" from Whitney.
In response to the news, Whitney stock plunged from $8.20 per share to less than $4 per share on December 18, 2006 on unusually heavy trading volumes.
Name (Stock Symbol)
Whitney Information Network Incorporated (RUSS.OB)
Whitney Information Network, Inc. is a provider of non-degreed adult education.
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