Prison Stocks Rocked As DoJ Announces It Will Stop Using Private Prisons

The Department of Justice announced that it would be phasing out the use of private prisons. The topic has been a controversial one for sometime, and the U.S. government finally determined that these private correctional facilities were not run as effectively and safe as government-run prisons.

Deputy Attorney General Sally Yates has instructed officials to either decline to renew contracts for private prison operators, or "substantially reduce" the contracts' scope. Many private correctional facilities are run by public corporations, and they are certainly feeling the heat from the news.

Investors have rushed to sell their stake in publicly traded private prison companies. The stocks fell so sharply that traded was temporarily halted.

Corrections Corporation of America CXW has shed nearly half its value, down 45 percent to $14.96.

The GEO Group Inc GEO is down over 39 percent at $19.71. While the GEO Group does operate in other countries outside of the US, America is by far its largest market.

Private Correctional facilities have long been blamed in profiting off the failed "War on Drugs," and a reason why the US has the highest incarceration rates in the world. The landmark decision by the DOJ may alter the future of law enforcement and the rehabilitation process of criminals in America.