Bridgepoint shares plunge on news of stock sale

NEW YORK (AP) -- Shares of online education company Bridgepoint Education Inc. sank Monday because its largest shareholder, private equity firm Warburg Pincus LLC, has put its entire stake up for sale.THE SPARK: Bridgepoint said in a regulatory filing late Friday that Warburg Pincus may sell all of its holdings: 34.6 million shares, or about 65 percent of Bridgepoint's outstanding stock. A potential flood of shares for sale could put pressure on the stock price.Bridgepoint will not receive any of the proceeds from a sale by Warburg Pincus.THE BACKGROUND: Bridgepoint's stock has nearly tripled since Warburg Pincus took it public in April 2009. The private equity firm has been an investor since the company was founded in 2004.Bridgepoint shares are also up 42 percent in 2011, despite a regulatory crackdown by the Department of Education that could fundamentally alter the for-profit education industry.The DOE has put in place rules limiting how school recruiters are paid. Now they can't receive bonuses based on how many students they enroll.The government will also limit a for-profit school's ability to provide its students federal financial aid loans if former students carry too much debt. The final version of this rule, the so-called gainful employment rule, was less onerous than many investors had expected. For-profit school stocks have bounced back from some of their steep declines over the past two years after the government announced the rule in early June.SHARE ACTION: In afternoon trading in New York, Bridgepoint shares dropped $3.50, or 11.5 percent, to $27. They've traded from $12.75 to $30.62 in the past 52 weeks. The stock hit $30.62, a record high, on Friday.