Opinion ID: 203099
Heading Depth: 3
Heading Rank: 1

Heading: Attrition Rate

Text: The amended complaint alleges that the Official Statement misled investors by failing to refer to Bradford's severe, long-standing problem with student attrition. The short answer is that the Statement warned that the college's ability to pay debt service was highly dependent upon tuition and fee revenues from students, and that a failure to attract and retain students in sufficient numbers . . . could adversely affect the ability of [the college] to make required payments on the Series 1998 Bonds. The Official Statement also presented enough information to notify investors that student attrition factored into the risk associated with the bonds. Tables in the Statement containing enrollment and admissions statistics covering academic years 1993 to 1997 revealed that the college enrolled new students each fall in numbers far exceeding one-quarter of total enrollment. [8] While some portion of the additional number of incoming students might be attributable to fluctuations in the number of transfer students and others not enrolled in a traditional four-year program at the college, these tables gave notice that some portion of the discrepancy would be due to attrition. The attrition rate at Bradford had, according to the amended complaint, been an extraordinary 60% since 1989. The amended complaint alleges that omitting that figure from the Official Statement concealed the college's inability to repay its bond debt. The defense argues those figures may be derived from the information provided. The plaintiffs argue that it is impossible to calculate from the tables the alleged 60% attrition rate. This may be true, but it is insufficient to make the other statements misleading. The amended complaint does not explain why omitting information about the precise attrition rate at Bradford would mislead investors when more pertinent measures of the college's financial health are presented forth-rightly in the Statement. [9] The Statement alerts investors that repayment of the bond debt depended entirely on Bradford's revenues, and that like most colleges, Bradford was highly dependent upon tuition and fee revenues from students. Student-generated revenue is, at any given time, a function of total enrollment levels, not of attrition. The Statement provided information about past and current enrollment levels, and the amended complaint never disputes the accuracy of those numbers. [10] Furthermore, the Statement contained information on admissions trends that would allow a potential investor to evaluate whether the college's enrollment level was sustainable. The college did not have a duty to disclose in the Statement every possible material fact about its operations and finances, so long as the disclosures that were made satisfied the statute. Cf. Gross v. Summa Four, Inc., 93 F.3d 987, 992 (1st Cir.1996) ([A] corporation does not commit securities fraud merely by failing to disclose all nonpublic material information in its possession. (citing Roeder v. Alpha Indus., Inc., 814 F.2d 22, 26 (1st Cir. 1987))). The Official Statement needed only disclose enough accurate information and not omit pertinent information to allow investors to make an informed decision about whether to invest. It did so.