Investor Sues Irvine-Based NEC

A New York investor has filed a class-action lawsuit against National Education Corp. of Irvine and its top executives, charging them with promulgating false and misleading information about the NEC’s financial condition between July 20 and Oct. 6, 1989.

NEC, a one-time high-flier in the vocational training and education business, has been reeling since last spring from problems at its Applied Learning subsidiary. On Oct. 5, the company announced that it expected a $6-million loss for the third quarter and that was having trouble with financing. The company’s stock lost more than 30% of its value the next day.

The suit charges that NEC concealed the problems at Applied Learning and made false, optimistic statements about the company’s financial condition in order to inflate the stock price. NEC was the target of a similar shareholder lawsuit filed in June after the company said it would have flat or declining earnings for the second quarter.

An NEC attorney said the company would vigorously defend itself against the allegations.