Dear Secretary Duncan,
In light of news reports that detail specific efforts by short sellers to influence Department of Education policy, we are writing to ask that you order the Department to release any and all correspondence its officials had with officials from FrontPoint Financial Services and other investments firms.
FrontPoint has a reputation for making bets on specific industries and appears to have exerted a significant effort in its attempts to use the Department of Education to impact the stock price of publicly traded career colleges and universities.
We are concerned that Mr. Eisman’s efforts and influence will result in Department policies that could force these schools as well as those that are privately held to close their doors. Indeed, one school in Pittsburgh cited a draft proposal that Mr. Eisman has championed as one of the reasons it is ceasing enrollment of new students and going out of business.
The new revelations about Mr. Eisman’s efforts to influence the Department follow last month’s news that the Government Accountability Office (GAO) analysis that is fueling the drive for the Department of Education to strengthen its oversight of career schools had to be significantly altered. The revisions to the GAO report are now prompting scrutiny from the new Chairman of the House Committee on Oversight and Government Reform.
There are now more questions about the effort to reform Federal oversight of career colleges and universities than there are about the industry itself.
In the interest of ensuring that the rulemaking process is being conducted appropriately, we ask that you release any and all communications between the Department of Education and investors such as Mr. Eisman, including phone calls, meeting minutes, correspondence and e-mails. By releasing this information to the public, you will be providing needed sunlight to a process that appears to raise serious questions.
Lastly, this letter is submitted to you the day after President Obama delivered his State of the Union address to the nation. One year ago, President Obama bemoaned the influence of special interests and those who attempt to affect public policy despite having competing interests. We would respectfully ask that your office review Mr. Obama’s words as it considers the request made in this correspondence.
Sincerely,
Henry Herzing
Chancellor and Founder
Herzing University
Robert Herzog
Chief Financial Officer
Harrison College
