According to the firm's 10-Q filing for the quarterly period ended June 30, 1999, on June 30, 1997, purported shareholders of the Company who are represented by a group of law firms filed a putative class action complaint against the Company and several of its current and former officers and directors in the United States District Court for the Eastern District of Pennsylvania. A second, similar complaint was filed in the same court a few days later by a different group of law firms. Both complaints allege that the Company made misrepresentations in certain of its public filings and statements in violation of the Securities Exchange Act of 1934. The complaints seek damages of an unspecified amount. On July 10, 1998, the complaints, which had previously been consolidated, were dismissed by the Court for failing to state a claim. The plaintiffs determined not to attempt to amend their complaints. Rather, they appealed the District Court's decision to the United States Courts of Appeals for the Third Circuit, which court, on June 17, 1999, affirmed the District Court.

The Complaint charges Advanta and certain of its officers with violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934. According to the Complaint, during the Class Period, defendants disseminated numerous announcements concerning the Company's earnings, return on equity, and growth which failed to disclose the fact that the performance of its credit card operations had reversed course. Specifically, Defendants are alleged to have employed a change in accounting methodology to mask and forestall recognition of this trend reversal. The Complaint further alleges that while these problems were concealed from the investing public, during the class period certain officers and directors sold over 890,000 shares of Advanta common stock for proceeds of over $39 million. Plaintiffs claim that upon disclosure of the true condition of the Company's business, the price of Advanta common stock declined over 20% to $31.875 per share, causing substantial losses for Advanta investors during the Class Period. As a result, the price of Advanta common stock traded at artificially inflated prices during the Class Period.