According to a Press Release dated December 2, 2003, FirstPlus Financial Group,
Inc. announced that on October 14, 2003, the United States District Court for the Northern District of Texas approved the settlement of the class action as fair, reasonable and adequate to the members of the class and directed the parties to consummate the settlement in accordance with the terms and provisions of the Stipulation and Agreement of Settlement (the "Stipulation"). Following the fairness hearing, the court entered its Order and Final Judgment and order of dismissal of the actions with prejudice. The Stipulation provides for a cash settlement of $5 million to be paid into an interest bearing account.
As summarized in the Notice of Pendency and Settlement of Class Action, beginning on or about October 29, 1998, and thereafter, twenty-three (23) proposed class actions alleging violations of federal securities laws were filed in the United States District Court for the Northern District of Texas and were subsequently consolidated under the caption In re: FirstPlus Financial Group, Inc. Securities Litigation, No. 3:98-CV-2551-M, and are hereinafter referred to as the "Action."
On September 12, 2000, the Court appointed Dr. James Rich, for the Rich Family Trust, Samuel Nappi and Susan J. Kagnoff-Marx as lead plaintiffs ("Lead Plaintiffs"). On September 12, 2000, the Court also appointed the law firms of Milberg Weiss Bershad Hynes & Lerach LLP and Sirota & Sirota LLP as Plaintiffs' Co-Lead Counsel, and Claxton & Hill, PLLC as Local Counsel. On May 16, 2002, the Court granted Samuel Nappi permission to withdraw as lead plaintiff, and on June 24, 2002, the Court granted Susan J. Kagnoff-Marx permission to withdraw as lead plaintiff. On May 24, 2002, the Court appointed Edward P. Doremus, III as a lead plaintiff in this Action. On October 27, 2000, a Consolidated Amended Complaint (the "Complaint") was filed for violations of federal securities laws, which alleged violations of Sections 11, 12 and 15 of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), and Rule 10b-5 promulgated thereunder. Defendants filed motions to dismiss the Complaint. On September 28, 2001, the Court issued an Order granting in part and denying in part Defendants' motions. The Court granted Defendant William P. Benac's motion to dismiss and dismissed the allegations against Mr. Benac with prejudice. The Court also dismissed with prejudice the claims asserted under the Securities Act that were based on the August 28, 1998 S-4 Registration Statement, Prospectus and Proxy Statement regarding the proposed acquisition of Life Financial Corporation and the January 7, 1998 and August 21, 1998 S-8 Registration Statement for FirstPlus' stock options. The Court denied Defendants' motions to dismiss in all other respects. On October 23, 2002, the Court denied Lead Plaintiffs' motion for class certification to the extent that it sought to have Dr. James E. Rich appointed as a class representative but granted Lead Plaintiffs' motion in all other respects, ordering that this Action shall be maintained as a class action pursuant to Rule 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure and appointing lead plaintiff Edward P. Doremus III (the "Class Representative") as the representative for the Class (as defined above).
The original complaint, alleges that during the class period defendants issued false and misleading statements and omitted material facts. In the complaint, plaintiffs allege that defendants violated Generally Accepted Accounting Practices ("GAAP")
with regard to FirstPlus' securitization of finance receivables. According to the Complaint, defendants understated prepayment rates and discount rates and under-reserved for impaired loans. Allegedly, when defendants belatedly disclosed previously concealed and misrepresented facts on November 2, 1998, the stock price plunged almost 20 percent. Investors who purchased during the class period suffered huge losses, as FirstPlus stock sunk to a level almost 93 percent lower than its high during the Class Period.