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| 2002 News and Press Releases |
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HEADLINE ARCHIVED:
How Regulatory Actions Breed Class Actions
By: Rob Garver
The American Banker. June 20, 2002
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Excerpt: For Providian Financial Corp., $300 million was just the beginning. When the San Francisco credit card provider agreed in June 2000 to the settlement to close a government investigation into its marketing practices, its troubles were far from over. The same issues that had drawn the attention of the Office of the Comptroller of the Currency, the San Francisco district attorney, and the Connecticut attorney general were also attracting class-action lawyers. And when the regulators went away, the plaintiffs' bar descended. Six months after settling with the government, Providian agreed to fork over another $105 million to settle a suit brought on behalf of customers who charged that they had been harmed by the same marketing practices that the OCC and others had been investigating. In March, Providian settled another class action. This time its shareholders claimed that because unfair marketing practices created artificially high profits, investors thought the company was in better financial condition than it really was. Providian paid them $38 million.
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