The Securities and Exchange Commission has settled its fraud case against ITT Educational Services, but it continues to pursue top executives from the defunct for-profit college firm for allegedly deceiving investors about high rates of late payments and defaults on student loans backed by the firm.
A final judgment order filed Friday resolves civil fraud charges brought against the company two years ago for alleged false and misleading statements about the failure of two in-house student-loan programs. There is no monetary penalty, and the company did not admit any wrongdoing.
ITT chief executive Kevin Modany and former chief financial officer Daniel Fitzpatrick are still fighting the allegations made against them by the SEC, which declined to comment on those proceedings.
Regulators at the SEC have accused ITT’s top brass of making secret payments on delinquent accounts to delay defaults instead of disclosing the tens of millions of dollars in impending losses to investors. According to the complaint, executives assured investors in conference calls that the programs were performing well, while ITT’s obligations to pay out on soured loans began to balloon.