The Justice Department plans to stop using private prisons.
Deputy Attorney General Sally Yates said in a Thursday statement that she sent out a memo instructing officials to not renew contracts with prison operators or to diminish existing contracts.
"This is the first step in the process of reducing — and ultimately ending — our use of privately operated prisons," she said.
The news was initially reported by The Washington Post, citing the deputy attorney general's memo.
Shares of Geo Group and Corrections Corporation of America were originally halted on the news and fell more than 20 percent when they reopened. Both stocks were then halted again and again for volatility.
Geo shares were last down more than 43 percent, while CCA was down more than 51 percent. These massive downside moves are the largest drops ever seen in either stock since their IPOs in the 1990s.
The companies were the two largest publicly traded private prison operators, but have seen their market caps crater after the news.