Private Prison Giant CCA Accused of “False and Misleading Statements”

Source: Becca Andrews, Mother Jones, August 24, 2016

A shareholder class action lawsuit was filed Wednesday against Corrections Corporation of America, a private prison company that was the subject of a recent Mother Jones investigation. Last week, the Department of Justice announced it would work to end its private prison contracts. A shareholder class action lawsuit was filed Wednesday against Corrections Corporation of America, a private prison company that was the subject of a recent Mother Jones investigation. Last week, the Department of Justice announced it would work to end its private prison contracts. ADVERTISEMENT The shareholders allege that CCA and its executive officers made false or misleading statements that put the business in jeopardy, charging that CCA failed to disclose to its investors that “facilities lacked adequate safety and security standards and were less efficient at offering correctional services than the Federal Bureau of Prisons” and that “consequently, the U.S. Department of Justice (‘DOJ’) was unlikely to renew and/or extend its contracts.” …

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CCA shareholder files securities fraud suit against company
Source: Jamie McGee, The Tennessean, August 24, 2016

A Corrections Corporation of America shareholder has filed a federal class action suit against the Nashville-based prison operator and two of its top executives, claiming they violated securities law by not disclosing safety and security issues to shareholders. The lawsuit, filed Tuesday, comes less than a week after the Department of Justice announced it would seek to end or reduce contracts with private prison companies, including CCA, because of safety issues. The announcement caused the company’s shares to plummet 35 percent on Aug. 18. … Defendants “failed to disclose that CCA’s facilities lacked adequate safety and security standards and were less efficient at offering correctional services than the Federal Bureau of Prisons’ facilities,” the complaint states. “Consequently, the U.S. Department of Justice was unlikely to renew and/or extend its contracts with CCA; and as a result of the foregoing, CCA’s public statements were materially false and misleading.” …

Shareholders in U.S. private prison company sue over phase-out
Source: Julia Edwards and Mica Rosenberg, Reuters, August 24, 2016

Shareholders in Corrections Corporation of America (CCA), whose value fell sharply following a federal government decision to phase out private prison contracts, sued the for-profit prison company this week alleging they were misled ahead of the government’s announcement. In a complaint filed in federal court in the Middle District of Tennessee on Tuesday, the plaintiffs argued that CCA, the country’s largest private corrections company, should have disclosed that its facilities were less effective and less safe than government-run prisons. The U.S. Justice Department used this argument when it announced last week it planned to gradually phase out use of private prisons. News of the department’s plan caused CCA’s share price to fall 39.45 percent on August 18, the lawsuit alleged. The class action status requested includes anyone who held CCA stock between February 27, 2012 and August 17, 2016. …