According to a press release dated February 3, 2012, the action alleges that the Company, certain of its executive officers, and certain entities affiliated with a major financial institution committed violations of the Securities Exchange Act of 1934.
The Company, which was sold by entities affiliated with the Financial Institution defendants at the end of 2010, was one of the nation's leading providers of education financing products. The complaint alleges that during the Class Period the Company made fraudulent material misrepresentations and omissions regarding its business and operations. Among other things, the complaint alleges that defendants materially misrepresented and/or failed to disclose the following adverse facts: (i) that the Company was experiencing high loan default and charge-off rates; (ii) that the Company had failed to engage in proper due diligence and underwriting in extending loans to high risk individuals/students; (iii) that the Company failed to properly and timely write down its non-performing loan portfolio assets by taking impairment charges required by Generally Accepted Accounting Principles ("GAAP"), and (iv) that the Company failed to charge adequate loan loss provisions for its loan portfolio in accordance with GAAP given the large, probable losses that were likely to be incurred.
On September 23, 2010, the Company released a statement describing the transactions pursuant to which the Company would be acquired by a Bidder Company. In connection with this release, the Company admitted that it had to take an impairment charge of almost $1 billion because certain loan assets had been carried on the Company’s books at inflated values.
On April 10, 2012, the Court issued an order appointing Oklahoma Firefighters and Elkhorn as lead plaintiff and Grant & Eisenhofer and Gardy & Notis were approved as co-lead counsel.
On June 22, 2012, Consolidated Amended Complaint was filed by the lead plaintiffs against the defendants.