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| 2002 News and Press Releases |
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SETTLEMENT ARCHIVED:
Shareholders Settle With Providian For $38 Million Securities Fraud
By: Staff Writer
National Law Journal. June 10, 2002
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Excerpt: Providian financial corp. shareholders who claimed that the company allegedly made false statements about its business practices after unfavorble news caused its stock price to plummet settled a class action with the company for $38 million. Providian was fined for charging customers for making late payments when payments were not actually late, charging customers for services they never ordered and inducing consumers to switch to Providian credit cards for lower interest rates and then denying the rates. News of the illegal business practices prompted a selloff of the company's stock, driving the price down. The plaintiffs alleged that Providian committed securities fraud by making false statements that the company had a sound business model and was making record profits. The shareholders alleged these statements were false, given the company's illegal treatment of customers. The defense denied that it committed either customer fraud or shareholder fraud. The defense also claimed that its business methods were legitimate and no different from those of other credit card companies.
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