Company: LGCY
Filing Date: 2025-09-25
Form Type: 10-K
Source: 0001493152-25-014945
Chunk: 39

Company: Legacy Education Inc.
Filing Date: 2025-09-25
Form: 10-K
Item: Item 1
Chunk 39
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 ED determines that one of our institutions has engaged
in “substantial misrepresentation,” ED may impose sanctions or other conditions upon the institution including, but not limited
to, initiating an action to fine the institution or limit, suspend, or terminate its eligibility to participate in the Title IV Programs
and may seek to discharge students’ loans and impose liabilities upon the institution. ED defines a “substantial misrepresentation”
to include any misrepresentation on which the person to whom it was made could reasonably be expected to rely, or has reasonably relied,
to that person’s detriment. The definition of “substantial misrepresentation” is broad and, therefore, it is possible
that a statement made by the institution or one of its service providers or representatives could be construed by ED to constitute a
substantial misrepresentation. Other federal agencies, state agencies, and accrediting agencies have similar rules that prohibit certain
types of misrepresentations or unfair marketing and advertising practices by us or others on our behalf on a variety of subjects including,
without limitation, the accuracy and substantiation of rates of graduation, job placement and passage of occupational licensure examinations.
Noncompliance with these requirements could result in sanctions, liabilities, or third-party litigation that could have an adverse effect
on our business and results of operations. ED published a final rule on November 1, 2022 which expanded the scope of prohibited misrepresentations,
and which also prohibits certain types of conduct with respect to the recruitment of students. The adoption and implementation of new
regulations could lead to findings of noncompliance and result in liabilities and other sanctions that could have an adverse effect on
our business and results of operations.

In
addition, the FTC has indicated an increased focus on direct or implied misrepresentations. For example, on October 6, 2021, the FTC
issued letters including a “Notice of Penalty Offenses Concerning Deceptive or Unfair Conduct in the Education Marketplace”
to 70 institutions. These letters were meant to place the recipients on actual notice of conduct the FTC previously found to violate
the Federal Trade Commission Act. This conduct included several categories of direct or implied misrepresentations made by proprietary
schools. These letters may reflect an increased interest by the FTC in monitoring the for-profit proprietary school sector. If our institutions
fail to comply with an FTC statute or rule or are found to have committed misconduct of which they had actual notice the FTC had previously
determined to be unfair or deceptive, our institutions could face civil penalties, injunction