In re ITT Educational Services, Inc.
Securities Litigation (Indiana)

Civil Action No. 1:14-cv-01599-TWP-DML


Frequently Asked Questions


BASIC INFORMATION




WHO IS IN THE SETTLEMENT

To see if you will receive money from this Settlement, you first have to determine if you are a Settlement Class Member.




THE SETTLEMENT BENEFITS - WHAT YOU GET


HOW YOU OBTAIN A PAYMENT — SUBMITTING A PROOF OF CLAIM FORM



EXCLUDING YOURSELF FROM THE CLASS ACTION SETTLEMENT

If you do not want a payment from the class action Settlement, but you want to keep the right to sue or to continue to sue the Defendants on your own for the Released Claims in the class action, then you must take steps to get out of the Settlement Class. This is called excluding yourself or is sometimes referred to as opting out of the Settlement Class.




THE LAWYERS REPRESENTING YOU


OBJECTING TO THE SETTLEMENT

You can tell the Court that you do not agree with the Settlement or some part of it.


THE COURT'S SETTLEMENT HEARING

The Court will hold a hearing to decide whether to grant final approval of the Settlement. You may attend and you may ask to speak, but neither is required.




IF I DO NOTHING

GETTING MORE INFORMATION


UNDERSTANDING YOUR PAYMENT

The Net Settlement Fund shall be distributed to Settlement Class Members who submit acceptable Proof of Claim forms (“Authorized Claimants”) in the following manner:

a. The Claims Administrator shall determine each Authorized Claimant’s share of the Net Settlement Fund based upon the recognized loss formula (the “Recognized Loss”) described below. The Recognized Loss formula is intended to equitably apportion the Net Settlement Fund among Settlement Class Members. The Recognized Loss formula is not an estimate of what a Settlement Class Member would have recovered after trial; nor is it the amount that the Authorized Claimant will be paid pursuant to the Settlement.

b. A Settlement Class Member’s actual share of the Net Settlement Fund will be determined by the ratio of the Settlement Class Member’s Recognized Loss divided by the aggregate of the Recognized Loss of all Settlement Class Members.

c. The Proposed Plan of Allocation or Recognized Loss formula is as follows:

For shares of common stock purchased or otherwise acquired between February 26, 2013 and May 11, 2015:

A. For shares held at the end of trading on August 7, 2015, the Recognized Loss shall be that number of shares multiplied by the lesser of:

(1) the applicable purchase date artificial inflation per share figure, as found in Table A; or

(2) the difference between the purchase price per share and $3.91.1

B. For shares sold between February 26, 2013 and May 11, 2015, the Recognized Loss shall be that number of shares multiplied by the lesser of:

(1) the applicable purchase date artificial inflation per share figure less the applicable sales date artificial inflation per share figure, as found in Table A; or

(2) the difference between the purchase price per share and the sales price per share.

C. For shares sold between May 12, 2015 and August 7, 2015, the Recognized Loss shall be the lesser of:

(1) the applicable purchase date artificial inflation per share figure, as found in Table A; or

(2) the difference between the purchase price per share and the sales price per share; or

(3) the difference between the purchase price per share and the average closing price between May 12, 2015 and the date of sale, as found in Table B.2

For shares of common stock purchased or otherwise acquired on May 12, 2015:

A. For shares held at the end of trading on August 7, 2015, the Recognized Loss shall be that number of shares multiplied by the lesser of:

(1) $1.70 per share; or

(2) the difference between the purchase price per share and $3.91.3

B. For shares sold between May 12, 2015 and August 7, 2015, the Recognized Loss shall be the lesser of:

(1) $1.70 per share; or

(2) the difference between the purchase price per share and the sales price per share; or

(3) the difference between the purchase price per share and the average closing price between May 12, 2015 and the date of sale, as found in Table B.4

For ITT Call and Put Options that expired after January 30, 2014:

ITT Call Options

(i) The Recognized Claim for each call option on ITT common stock purchased or otherwise acquired during the Class Period shall be the difference between: (a) the amount paid per call option and: (b) the sale price received per option contract received if the call option was subsequently sold (if the option expired worthless while still owned by the Authorized Claimant, the sales price shall be deemed to be Zero ($0.00));

(ii) Shares of ITT common stock acquired during the Class Period through the exercise of a call option shall be treated as a purchase on the date of exercise for the exercise price plus the cost of the call option, and any Recognized Claim arising from such transaction shall be computed as provided for other purchases of ITT common stock as set forth herein;

(iii) No Recognized Claim shall be calculated based upon the sale or writing of any call option that was subsequently repurchased.

ITT Put Options

(i) The Recognized Claim for each put option on ITT common stock sold or written during the Class Period, shall be the difference between: (a) the amount received per put option and (b) the purchase price paid per put option if the put option was subsequently repurchased at any time (including after the Class Period). For put options sold or written during the Class Period that expired worthless and unexercised, the Authorized Claimant’s Recognized Claim shall be Zero ($0.00);

(ii) For ITT put options that were sold or written during the Class Period, that were “put” to the Authorized Claimant (i.e. exercised) at any time, the Authorized Claimant’s Recognized Claim shall be calculated as a purchase of ITT common stock, and as if the sale of the put option were instead a purchase of ITT common stock on the date of the sale or writing of the put option, and the “purchase price paid” shall be the strike price of the put option less the proceeds received from the sale of the put option;

(iii) No Recognized Claim shall be calculated based upon the sale or writing of any call option that was subsequently repurchased.



Table A

Purchase or Sale Date Range Artificial Inflation Per Share
02/26/2013 - 01/29/2014 $16.09
01/30/2014 - 05/21/2014 $ 8.70
05/22/2014 – 09/18/2014 $ 5.50
09/19/2014 – 04/29/2015 $ 2.93
04/30/2015 $ 2.23
05/01/2015 – 05/11/2015 $ 1.70
05/12/2015 $ 0.00


Table B

Date of Sale Average Closing Price Between 05/12/2015 and Date of Sale Date of Sale Average Closing Price Between 05/12/2015 and Date of Sale
5/12/2015 $2.27 6/25/2015 $3.71
5/13/2015 $2.24 6/26/2015 $3.73
5/14/2015 $2.28 6/29/2015 $3.74
5/15/2015 $2.41 6/30/2015 $3.75
5/18/2015 $2.43 7/01/2015 $3.76
5/19/2015 $2.44 7/02/2015 $3.77
5/20/2015 $2.42 7/06/2015 $3.78
5/21/2015 $2.42 7/07/2015 $3.78
5/22/2015 $2.43 7/08/2015 $3.78
5/26/2015 $2.43 7/09/2015 $3.78
5/27/2015 $2.45 7/10/2015 $3.78
5/28/2015 $2.45 7/13/2015 $3.78
5/29/2015 $2.59 7/14/2015 $3.78
6/01/2015 $2.80 7/15/2015 $3.79
6/02/2015 $2.93 7/16/2015 $3.81
6/03/2015 $3.00 7/17/2015 $3.82
6/04/2015 $3.06 7/20/2015 $3.84
6/05/2015 $3.11 7/21/2015 $3.85
6/08/2015 $3.12 7/22/2015 $3.88
6/09/2015 $3.15 7/23/2015 $3.90
6/10/2015 $3.17 7/24/2015 $3.92
6/11/2015 $3.22 7/27/2015 $3.94
6/12/2015 $3.28 7/28/2015 $3.96
6/15/2015 $3.34 7/29/2015 $3.99
6/16/2015 $3.40 7/30/2015 $3.99
6/17/2015 $3.46 7/31/2015 $3.98
6/18/2015 $3.52 8/03/2015 $3.97
6/19/2015 $3.57 8/04/2015 $3.95
6/12/2015 $3.60 8/05/2015 $3.94
6/23/2015 $3.64 8/06/2015 $3.92
6/24/2015 $3.68 8/07/2015 $3.91

d. A purchase or sale of ITT common stock shall be deemed to have occurred on the “contract” or “trade” date as opposed to the “settlement” or “payment” date.

e. The receipt or grant by gift, devise or operation of law of shares of ITT common stock during the Settlement Class Period shall not be deemed a purchase or sale of ITT common stock shares for the calculation of an Authorized Claimant’s Recognized Loss, nor shall it be deemed an assignment of any claim relating to the purchase of such securities. The grantor of the gift or devise, who purchased ITT common stock during the Settlement Class Period, shall retain the right to file a claim in this Litigation unless that right to file a claim was specifically transferred in the instrument of gift or assignment.

f. The receipt of ITT common stock during the Settlement Class Period in exchange for securities of any other corporation or entity shall not be deemed a purchase or sale of ITT common stock.

g. Any gains on sales of ITT common stock shall be offset against losses in calculating the Recognized Loss. To the extent a Claimant had an overall gain from transactions in ITT common stock during the Settlement Class Period, the value of the Recognized Loss will be zero.

h. The total recovery payable to Authorized Claimants from transactions in call or put options shall not exceed five percent (5%) of the Net Settlement Fund.

i. For Settlement Class Members who made multiple purchases or sales during the Settlement Class Period, the first-in, first-out (“FIFO”) method will be applied to such holdings, purchases, and sales for purposes of calculating a claim. Under the FIFO method, sales of ITT Securities during the Settlement Class Period will be matched, in chronological order, against ITT Securities purchased during the Settlement Class Period.

j. No Authorized Claimant whose proportionate share of the Net Settlement Fund is less than $20.00 shall receive a distribution from the Net Settlement Fund. Rather, that Claimant’s proportionate share of the Net Settlement Fund shall be redistributed among all remaining Authorized Claimants.

k. Settlement Class Members whose Request for Exclusion is not received by the deadline and do not submit an acceptable Proof of Claim by the deadline for submitting claims will not share in the recovery, but nevertheless will be bound by the Settlement and the Order and Final Judgment of the Court releasing claims against Defendants and other Released Persons and dismissing this Litigation.

l. Distributions will be made to Authorized Claimants after all claims have been processed and after the Court has finally approved the Settlement.

DO NOT TELEPHONE THE COURT REGARDING THIS NOTICE
SPECIAL NOTICE TO NOMINEES

The Court has ordered that if you held any ITT Securities purchased or acquired between February 28, 2013 and May 12, 2015, both dates inclusive, as nominee for a beneficial owner, then, within fourteen (14) days after you receive this Notice, you must either: (1) send a copy of this Notice and the Proof of Claim form by first class mail to all such beneficial owners; or (2) provide a list of the names and addresses of all such beneficial owners (preferably in the format of an electronic spreadsheet) to the Claims Administrator:

ITT Educational Services, Inc. Securities Litigation
Claims Administrator
1801 Market Street, Suite 660
Philadelphia, PA 19103
ITTEducationSecuritiesLitigation-Indiana@AngeionGroup.com

If you choose to mail the Notice and Proof of Claim form yourself, you may obtain from the Claims Administrator (without cost to you) as many additional copies of these documents as you will need to complete the mailing.

Regardless of whether you choose to complete the Notice mailing yourself or elect to have the Notice mailing performed for you, you may obtain reimbursement for administrative costs reasonably and actually incurred in connection with forwarding the Notice and which would not have been incurred but for the obligation to forward the Notice, upon submission of appropriate documentation to the Claims Administrator.


Footnotes:

  • 1. Pursuant to Section 21(D)(e)(1) of the Private Securities Litigation Reform Act of 1995, “in any private action arising under this title in which the plaintiff seeks to establish damages by reference to the market price of a security, the award of damages to the plaintiff shall not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the subject security and the mean trading price of that security during the 90 day period beginning on the date on which the information correcting the misstatement or omission that is the basis for the action is disseminated.” The mean (average) closing price of ITT common stock during the 90 day period beginning on May 12, 2015 and ending on August 7, 2015 was $3.91 per share. [Return to Text]

  • 2. Pursuant to Section 21(D)(e)(2) of the Private Securities Litigation Reform Act of 1995, “in any private action arising under this title in which the plaintiff seeks to establish damages by reference to the market price of a security, if the plaintiff sells or repurchases the subject security prior to the expiration of the 90-day period described in paragraph (1), the plaintiff’s damages shall not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the security and the mean trading price of the security during the period beginning immediately after dissemination of information correcting the misstatement or omission and ending on the date on which the plaintiff sells or repurchases the security.” [Return to Text]

  • 3. Pursuant to Section 21(D)(e)(1) of the Private Securities Litigation Reform Act of 1995, “in any private action arising under this title in which the plaintiff seeks to establish damages by reference to the market price of a security, the award of damages to the plaintiff shall not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the subject security and the mean trading price of that security during the 90 day period beginning on the date on which the information correcting the misstatement or omission that is the basis for the action is disseminated.” The mean (average) closing price of ITT common stock during the 90 day period beginning on May 12, 2015 and ending on August 7, 2015 was $3.91 per share. [Return to Text]

  • 4. Pursuant to Section 21(D)(e)(2) of the Private Securities Litigation Reform Act of 1995, “in any private action arising under this title in which the plaintiff seeks to establish damages by reference to the market price of a security, if the plaintiff sells or repurchases the subject security prior to the expiration of the 90-day period described in paragraph (1), the plaintiff’s damages shall not exceed the difference between the purchase or sale price paid or received, as appropriate, by the plaintiff for the security and the mean trading price of the security during the period beginning immediately after dissemination of information correcting the misstatement or omission and ending on the date on which the plaintiff sells or repurchases the security.” [Return to Text]