Corrections Corporation of America (NYSE: CXW)
A class action has been commenced in the U.S. District Court for the Middle District of Tennessee on behalf of purchasers of Corrections Corporation of America (NYSE: CXW) common stock during the period between February 27, 2012 and August 17, 2016 (the “Class Period”).
The complaint charges Corrections Corporation of America (“CCA”) and certain of its officers with violations of the Securities Exchange Act of 1934. CCA, together with its subsidiaries, owns and operates privatized correctional and detention facilities in the United States. The Company owns, operates and manages prisons and other correctional facilities and provides inmate residential and prisoner transportation services for governmental agencies. As of 2015, CCA was the largest private corrections company in the United States, managing more than 65 correction and detention facilities in 19 states and the District of Columbia.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding CCA’s business and prospects, including that: (i) CCA's facilities lacked adequate safety and security standards and were less efficient at offering correctional services than the facilities operated by the Federal Bureau of Prisons ("BOP"); (ii) CCA's rehabilitative services for inmates were less effective than those provided by the BOP; and (iii) consequently, the U.S. Department of Justice ("DOJ") was unlikely to renew and/or extend its contracts with CCA. As a result of these false statements and/or omissions, CCA securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of over $42 per share.
On or around August 11, 2016, the DOJ’s Office of the Inspector General issued a report entitled “Review of the Federal Bureau of Prisons’ Monitoring of Contract Prisons” (the “Review”), which found that “in most key areas, contract prisons [including CCA] incurred more safety and security incidents per capita than comparable BOP institutions.”
Then on August 18, 2016, Deputy Attorney General Sally Yates announced, based on the Review, the DOJ's decision to end its use of private prisons, including those operated by CCA, concluding that the facilities are both less safe and less effective at providing correctional services than those run by the BOP. Deputy Attorney General Yates stated in a memorandum to the Acting Director of the BOP that private prisons “do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the [DOJ’s] Office of Inspector General, they do not maintain the same level of safety and security.” In conclusion, Ms. Yates stated that, “[f]or all these reasons, I am eager to enlist your help in beginning the process of reducing – and ultimately ending – our use of privately operated prisons.” On this news, the price of CCA shares fell $9.65 per share, or nearly 40%, to close at $17.57 per share on August 18, 2016.
If you are a current shareholder and/or purchased stock between February 27, 2012 and August 17, 2016, and would like to discuss your options of exercising your rights as a shareholder, please contact us.
Please submit the following information so we can determine if you qualify for the suit. If you don't know all the specific details, partial information is also acceptable.
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