On November 21, 2016, Pomerantz LLP was appointed Lead Counsel in a class action lawsuit filed against The GEO Group, Inc. (“GEO” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Southern District of Florida, and docketed under 16-cv-81494, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired GEO securities between March 1, 2012 and August 17, 2016 both dates inclusive (the “Class Period”). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws under the Securities Exchange Act of 1934.
GEO provides government-outsourced services specializing in the management of correctional, detention, and re-entry facilities, and the provision of community based services and youth services in the United States, Australia, South Africa, the United Kingdom, and Canada. The Company operates through four segments: U.S. Corrections & Detention, GEO Community Services, International Services, and Facility Construction & Design.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, defendants made false and/or misleading statements and/or failed to disclose that: (i) GEO’s facilities lacked adequate safety and security standards and were less efficient at offering correctional services than the Federal Bureau of Prisons’ (“BOP”) facilities; (ii) GEO’s rehabilitative services for inmates were less effective than those provided by BOP; (iii) consequently, the U.S. Department of Justice (“DOJ”) was unlikely to renew and/or extend its contracts with GEO; and (iv) as a result of the foregoing, GEO’s public statements were materially false and misleading at all relevant times.
On August 18, 2016, Deputy Attorney General Sally Yates announced the DOJ’s decision to end its use of private prisons, including those operated by GEO, after officials concluded that GEO’s facilities are both less safe and less effective at providing correctional services than those run by the federal government.
On this news, GEO’s share price fell $12.78, or 39.58%, to close at $19.51 on August 18, 2016.