Americans for Tax Reform (ATR) President Grover Norquist today sent a letter to Securities and Exchange Commission Director of Enforcement Robert Khuzami calling for an investigation into the Department of Education’s “gainful employment” rulemaking process. This new rule makes it more difficult for students pursuing degrees at private, for-profit instructions to secure federal student aid. As a result, many of these colleges will be forced to close their doors for good. Describing the situation, Mr. Norquist wrote:
“Knowing this, Steve Eisman—a hedge fund manager for FrontPoint Financial Services and esteemed short-seller—and other financial executives may have worked hand in glove with Department of Education officials and non-profit education groups to write the gainful employment rule. This afforded Mr. Eisman and other investors intimate, inappropriate knowledge about the forthcoming gainful employment rule. Traders were then able to monetize this information by short-selling for-profit institutions’ stocks.
This combination of discordant policy, insider politics, and huge financial gain has left a dark cloud over the Department of Education and its rulemaking process. Although the Department of Education’s Office of Inspector General has launched a probe into possible nefarious short-selling, Americans and those affected by the gainful employment rule deserve a parallel investigation from your office.”
Click here for a PDF copy of the letter.