According to the website of Lerach Coughlin Stoia Geller Rudman & Robbins LLP, Lerach Coughlin attorneys served as co-lead counsel for the case In re Reliance Acceptance Group, Inc. Sec. Litig., MDL No. 1304 (D. Del.), and obtained a recovery of $39 million.
According to the docket, 98-CV-858, the securities class action litigation against Reliance Acceptance Group in the USDC for the District of Delaware, on March 29, 2001, the Court entered the Order granting in part and denying in part defendants’ various motions for summary judgment. On October 12, 2001, a Stipulation of Settlement was filed by and among The Class, The Estate Parties, The Graham Defendants, The Cole Family, and The Taylor Defendants. Further, on December 3, 2001, a Stipulation of Settlement with KPMG LLP was filed. On February 12, 2005, the Court entered the Orders granting the motion to approve and implement The Class 5 Allocation, the awarding of plaintiffs’ counsel’s attorneys’ fees and reimbursement of expenses and the order approving the plan of allocation of settlement proceeds. Also, the Court entered two Final Judgment and Orders of Dismissal with Prejudice as to KMPG LLP and with respect To The Class, Director and Officer and Estate Settlement. The case was closed.
The Judicial Panel on Multidistrict Litigation transferred the Texas and Illinois class action lawsuits to the USDC for the District of Delaware to consolidate discovery and other pre-trial matters with the adversary proceedings in the bankruptcy. The case number for the Multidistrict Litigation is 99-MD-1304. The consolidated securities class action is captioned Graham et al. v. Taylor Capital Group et al. (In re Reliance Sec. Litig.), C.A. No. 99-858-RRM.
According to the USDC for the Northern District of Illinois docket, on March 20, 1998, the plaintiffs filed a First Amended Class Action Complaint. On July 22, 1998, the Court entered the Minute Order by the Honorable Joan B. Gottschall granting the motion to appoint the Sabbia Group as lead plaintiffs. On August 18, 1999, the plaintiffs filed a Consolidated Amended Complaint for violations of the Securities Exchange Act of 1934, Supplemental State Law Claims and ERISA. In October and November 1999, the defendants filed various motions to dismiss the plaintiffs' consolidated amended complaint, but on December 28, 1999, the Court entered the Conditional Transfer Order from the MDL Panel. The case was transferred to the U.S. District Court of Wilmington, Delaware.
According to the most recent docket posted for the filing in the Western District of Texas, the case was closed on February 4, 1999, due to a filing of Chapter 11 Bankruptcy by Reliance Acceptance Group, Inc. The case has been transferred to the U.S. District Court for the Northern District of Illinois.
The original complaint charges that Reliance, the Taylor family, certain other insiders, its auditors and its financial advisors inflated the assets and income of the Company's subprime auto loan business by grossly understating its bad loan reserve thereby defrauding purchasers of Reliance stock during the Class Period in violation of the Securities Exchange Act of 1934 and state law. This enabled the Taylor family to induce shareholders to approve a split-off to the Taylors, Reliance's dominant shareholders, of the profitable Cole Taylor Bank subsidiary while leaving the public stockholders with Reliance's Cole Taylor Finance Co. subsidiary. At the time of the shareholder vote defendants represented the finance subsidiary as a rapidly growing and profitable subprime auto loan business when, in fact, it was technically insolvent. The complaint further alleges that only a few days after the February 12, 1997 completion of the spin-off, defendants began to reveal Reliance's problems. In the following nine months, defendants were forced to announce $110 million in charges against income to add to Reliance's loan loss reserves. In light of these belated disclosures, Reliance recently filed for bankruptcy protection. Its stock price plummeted to less than $0.25 per share from its Class Period high of $31.25.
The original complaint also alleges that Reliance breach its fiduciary duty, and charge Reliance with violations of the Employee Retirement Income Security Act of 1974 ("ERISA"). The complaint explains that ERISA has also been violated, because the defendants exchanged the Cole Taylor common stock held in its Employee Stock Ownership Plan and its 401(k)/Profit Sharing Plan for Reliance common stock, as part of the split-off transaction.
On February 6, 2998, a similar purported class action complaint was also filed in the U.S. District Court for the Northern District of Illinois.