An investigation on behalf of former and current students of Education Management Corp (NASDAQ:EDMC) was announced in connection with the report by the Government Accountability Office with the title 'For-Profit Colleges: Undercover Testing Finds Colleges Encouraged Fraud in Deceptive and Questionable Marketing Practices.'

Education Management Corporation (EDMC) is a provider of post-secondary education. It operates through The Art Institutes, Argosy University, Brown Mackie College, and South University. Education Management Corp has been accused of securities fraud by an investor lawsuit for allegedly issuing a series of materially false and misleading statements related to its business and operations, and violated the Securities Act of 1933 by issuing a materially false and misleading registration statement and proxy-prospectus in connection with the October 2, 2009 Initial Public Offering.

On August 4, 2010, the Senate Health, Education, Labor, and Pensions Committee conducted a hearing on for-profit education firms, where Government Accountability Office representative, George Kutz, presented the findings of report GAO-10-948T, 'For-Profit Colleges: Undercover Testing Finds Colleges Encouraged Fraud in Deceptive and Questionable Marketing Practices.' The report detailed undercover investigations into 15 for-profit schools that uncovered misconduct by school staff. According to this GAO study, the college personnel at schools owned by Education Management Corp. may have encouraged applicants to falsify their financial aid forms to qualify for federal aid and pressured applicants to sign a contract for enrollment prior to allowing them to speak to a financial advisor.

According to the investigation by a law firm former and current students of Education Management Corporation may have material information concerning those allegations and may be eligible to file a complaint for allegedly misleading students.

Also whistleblowers may according to the law firm be able to assist or file their own complaint. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law in July the SEC can award between 10 percent and 30 percent of any monetary sanctions of more than $1 million to whistleblowers who provide original information leading to a successful SEC enforcement, so the law firm. Whistleblowers may remain completely anonymous and work with the SEC through an attorney. Under the new law, so the investigation, whistleblowers are also granted expanded rights and protections against employer retaliation when disclosing information of corporate wrongdoing to the SEC.

Recently the Attorney General of Florida Bill McCollum launched an investigation into some for-profit education companies including Education Management Corporation. On October 19, 2010, the Wall Street Journal reported that Florida Attorney General's office has launched an investigation into five for-profit colleges, including four publicly traded schools, seeking information on potential misrepresentations in financial aid, recruitment and other areas. The state is reportedly looking into allegations at Washington Post Co.'s (WPO) Kaplan Inc.--including its Kaplan University, Kaplan Educational Centers and Kaplan College units--and at Education Management Corp.'s (EDMC) Argosy University, Apollo Group Inc.'s (APOL) University of Phoenix; Corinthian Colleges Inc.'s (COCO) Everest College and privately held MedVance Institute.