According to a press release dated October 23, 2010, the Complaint alleges that On October 12, 2010, Meta Financial filed a report with the Securities Exchange Commission (the "SEC") announcing that the Office of Thrift Supervision ("OTS") had advised the Company, as early as October 6, that it has determined that Meta Financial had engaged in "unfair or deceptive acts or practices in violation of Section 5 of the Federal Trade Commission Act and the OTS Advertising Regulation in connection with the Bank's operation of the iAdvance program, and required the Bank to discontinue all iAdvance line of credit origination activity by October 13, 2010."
The Company's report further stated it is anticipated that the discontinuance of the iAdvance program and the potential discontinuance of the tax-related programs (which are subject to OTS approval) "will eliminate a substantial portion of [the Company's] gross profit (net revenue less direct expenses). In addition, the discontinuance of the iAdvance program may result in elevated rates of nonpayment on outstanding iAdvance loans." Following the publication of this report, the next trading day, shares of the Company dropped precipitously -- falling over $13.00 per share, to below $20.00 per share -- a decline of over 40%.
The plaintiff in the first filed class action voluntarily dismissed his action. The case is continuing in a second filed action, Alaa M. Elgaouni v. Meta Financial Group, Inc., J. Tyler Haahr, David W. Leedom, Case No. C10-4108MWB.
On January 12, 2011, Judge Mark W. Bennett granted the motion to appoint The Eden Partnership as lead plaintiff and approved The Eden Partnership's selection of Kahn Swick & Foti LLC as lead counsel. The lead plaintiff filed an Amended Complaint on March 14, 2011, and the defendants responded by filing a motion to dismiss. The motion was denied on July 18, 2011.
On January 5, 2012, a Settlement Agreement was filed. The proposed settlement is in the amount of $2.1 million in cash.