A Lincoln Educational Services investor filed a lawsuit on behalf of purchasers of the common stock of Lincoln Educational Services Corporation between March 3, 2010 and August 5, 2010 against Lincoln Educational Services Corp. over alleged violations of Federal Securities Laws. Meanwhile an investigation on behalf of current long term investors of Lincoln Educational Services Corporation (NASDAQ:LINC), also including those who purchased prior to March 2010 and continue to hold those LINC shares, over possible breaches of fiduciary duties by certain officers and directors of Lincoln Educational Services was announced.

According to the complaint filed in the United States District Court for the District of New Jersey
the plaintiff alleges on behalf of purchasers of the common stock of Lincoln Educational Services Corporation between March 3, 2010 and August 5, 2010, that Lincoln Educational Services issued between March 3, 2010 and August 5, 2010, a series of materially false and misleading statements related to its business and operations in violation of the Securities Exchange Act of 1934. The investigation on behalf of behalf of current long term investors in Lincoln Educational Services Corporation (NASDAQ:LINC) seeks to determine whether certain officers and directors of Lincoln Educational Services breached their fiduciary duties in connection with the alleged securities laws violations.

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 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. Following these disclosures, so the lawsuit, shares of Lincoln Educational Services collapsed -- falling over $4.30, or 20% in a single trading day, on unusually high trading volume.