On September 14, 2006, the plaintiff filed a notice of appeal from the final judgment dismissing the case with prejudice. The plaintiff later voluntarily withdrew the appeal on October 23, 2006 and the judge ordered the case closed with parties to bear their own costs.
According to the Company’s FORM 10-K for the fiscal year ended June 30, 2006, on August 16, 2006, the Court entered an Order dismissing the Pierce case as to all remaining claims and to all parties, with prejudice. The plaintiff has thirty days from August 16, 2006 within which to initiate an appeal of the dismissal.
As summarized by the same SEC filing, in fiscal 2003, several complaints were filed by shareholders against the Company and certain of its officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder as well as violations of Sections 11 and 15 of the Securities Act of 1933 in connection with the Company’s secondary public offering of common stock on October 1, 2002. These complaints were consolidated into one action, styled Pierce v. AmeriCredit Corp., et al., and were pending in the United States District Court for the Northern District of Texas, Fort Worth Division. The plaintiff in Pierce sought class action status. In Pierce, the plaintiff claimed, among other allegations, that deferments were improperly granted by the Company to avoid delinquency triggers in securitization transactions and enhance cash flows and to incorrectly report charge-offs and delinquency percentages, thereby causing the Company to misrepresent its financial performance throughout the alleged class period. The plaintiff also alleged that the Company’s registration statement and prospectus for the offering contained untrue statements of material facts and omitted to state material facts necessary to make other statements in the registration statement not misleading.
The original complaint charges AmeriCredit and certain of its officers and
directors with violations of federal securities laws. Among other
things, plaintiff claims that defendants' material omissions and the
dissemination of materially false and misleading statements regarding
the nature of AmeriCredit's revenues and earnings caused AmeriCredit's
stock price to become artificially inflated, inflicting enormous damages
on investors. More specifically, the plaintiff alleges that defendants
misrepresented AmeriCredit's financial performance by improperly
deferring delinquent loans to avoid customer defaults so AmeriCredit
could have access to cash that otherwise would have been restricted. As
a result of defendants' scheme, the plaintiff complains, defendants
maintained inadequate cash reserves.