Why Intueri Education Group Ltd shares are in a trading halt

The education sector has seen its fair share of criticism – and seen its fair share of collapses – over the past two years. Today, Intueri Education Group Ltd (ASX: IQE) revealed it faces additional problems after it was forced to request a trading halt from the ASX.

In its release, Intueri said that it “requests an immediate trading halt on its securities pending the release of an announcement to the market concerning notification received from the Australian Skills Quality Authority (ASQA) relating to possible sanctions.” (emphasis added).

The Australian Skills Quality Authority (“AQSA”) is the national regulatory authority that oversees the Vocational Education and Training (VET) sector. It is responsible for maintaining the quality of the sector and, according to its website, must focus on mitigating the most significant risks identified. That it has chosen to engage with Intueri does not bode well for the company.

AQSA launched an investigation into the VET sector earlier this year over concerns about the quality of many courses on offer, with prices and course lengths dropping precipitously. The announcement of possible sanctions from Australia’s regulatory body in the sector is unlikely to be good news.

Intueri’s recent woes include previous investigations by New Zealand’s (Intueri is dual-listed) serious fraud office, a big decline in half year profits, and the sudden departure of the CEO in August.

Intueri is also far from the only Australian company to come under fire, with Australian Careers Network Ltd (ASX: ACO) going into administration last year, and being raided by the Australian Federal Police in April this year. Investors may also recall Vocation Ltd, which collapsed under similar concerns over a year ago.

Larger listed provider Navitas Limited (ASX: NVT) has so far avoided the sector – and the scandal – but said in an interview in February that it did see opportunity in the embattled sector.

However, given the multiple companies that are now facing regulatory sanctions in the sector, investors might be best off avoiding the vocational education sector entirely.

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Motley Fool contributor Sean O'Neill has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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