For Immediate Release


Garrett Russo at 202.408.5565 or

CREW Provides SEC New Information about Short-sellers’ Efforts to Shape Education Regulations

WASHINGTON - Today Citizens for Responsibility and Ethics in Washington (CREW) sent letters to the Director of Enforcement for the Securities and Exchange Commission (SEC) and U.S. Department of Education Secretary Arne Duncan to share records CREW obtained through its Freedom of Information Act (FOIA) lawsuit against Education.  These documents show high-level Education officials colluded with Wall Street short-sellers, improperly leaking the contents of highly controversial gainful employment regulations in advance of their publication. Click here to read the letters.

“These new documents, combined with others previously uncovered by CREW raise troubling questions about the actions of high-level Education officials, the fairness of the agency’s regulatory process, and investors’ efforts to manipulate Education regulations for their own personal gain,” said CREW Executive Director Melanie Sloan. “It is incumbent on the SEC to fully investigate this matter.”

CREW has an ongoing lawsuit against Education for documents related to the department’s communications with short-sellers. Sloan stated, “While previously claiming all relevant documents had been released, when it came time to report to the court, Education suddenly announced new documents had been discovered. The department’s actions certainly don’t instill confidence in its search.  Are there other even more incriminating documents still to be found?”

The newly released documents include an email from noted short-seller Steven Eisman sent days before controversial regulations governing the for-profit education industry were to be released. Mr. Eisman advised Education officials that stocks in the for-profit sector “are running because people are hearing DOE is backing down on gainful employment,” and also noted “I know you cannot respond.”


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Two days later Education officials put together a plan to give advance notice of the regulations to a select group, which included individuals and entities in contact with Mr. Eisman as well as others acting on his behalf.  This would have allayed Mr. Eisman’s concerns that Education might be backing away from aggressively regulating the for-profit education industry.

“It appears that short-sellers like Mr. Eisman, with no expertise or stake in education policy, may have influenced the Department of Education’s regulation of for-profit education institutions for financial gain,” said Ms. Sloan.  “It stands to reason that if this is happening in one agency, it may well be happening at others. All Americans should be concerned about whether Wall Street investors are insinuating themselves into the federal regulatory process to manipulate stock prices.”


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Citizens for Responsibility and Ethics in Washington (CREW) is a nonprofit 501(c)(3) organization dedicated to promoting ethics and accountability in government and public life by targeting government officials -- regardless of party affiliation -- who sacrifice the common good to special interests. CREW advances its mission using a combination of research, litigation and media outreach.

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