NEW YORK, June 27, 2013 (GLOBE NEWSWIRE) -- Scott+Scott, Attorneys at Law, LLP filed a class action complaint against Cash Store Financial Services, Inc. ("Cash Store" or the "Company") in the United States District Court for the Southern District of New York. The securities class action, which seeks remedies under the Securities Exchange Act of 1934, was filed on behalf of those persons and entities who purchased or otherwise acquired Cash Store securities (NYSE:CSFS) between November 24, 2010 and May 13, 2013, inclusive (the "Class Period").
Investors who purchased Cash Store common stock during the Class Period and wish to serve as a lead plaintiff in the class action must move the Court no later than August 26, 2013. Members of the investor class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain absent class members in the lawsuit. If you wish to view the class action complaint, discuss the Cash Store lawsuit, or have questions concerning this notice or your rights, please contact Scott+Scott (email@example.com, (800) 404-7770, (860) 537-5537) or visit the Scott+Scott website for more information: http://www.scott-scott.com.
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Cash Store is a pay-day lender based in Alberta, Canada. The Company primarily operates in Canada, where it maintains 579 branches under the banners "Cash Store Financial" and "Instaloans." During the Class Period, Cash Store was traded on the NYSE under the ticker symbol "CSFS."
The securities class action charges that, throughout the Class Period, Cash Store made a series of false and misleading statements concerning the Company's financial condition that caused the Company's shares to trade at an artificially high price.
Specifically, the complaint alleges that Cash Store made a number of false and misleading statements in its quarterly and annual financial statements in which it overvalued a major loan portfolio it had acquired. Additionally, the Company understated its liabilities associated with a class action settlement.
On December 10, 2012, the Company revealed that it needed to restate its financial statements and that it had inappropriately accounted for the acquisition of a large loan portfolio in violation of U.S. Generally Accepted Accounting Principles ("GAAP"). Specifically, the Company determined that a $36.8 million premium should have been recorded as an expense. The Company further stated that it was going to restate the fair value of the loans acquired to $50 million from which the Company had paid $116.3 million and that its provision for loan losses for the three month periods ending March 31, 2012 and June 30, 2012 was understated by $3.3 million and $3.7 million, respectively. Significantly, the Company admitted that material weaknesses existed as to the Company's internal controls and that such weaknesses led to the restatement.
On February 13, 2013, Cash Store announced that it would again have to restate financial statements because the previous annual and interim financial statements improperly calculated the losses accrued due to a lawsuit settlement. Although every financial statement filed with the SEC estimated liability relating to the lawsuit to be approximately $18 million, in reality the losses were $23.3 million – or approximately 25% higher than previously reported. The Company admitted that its previous financial reports should not be relied upon and that material weaknesses in internal controls for accounting existed during all periods dating back to 2010.
The complaint alleges that, as a result of the foregoing, Cash Store stock plummeted approximately 71.25%, from its Class Period high of $17.10 per share to $3.83 per share at the close of the Class Period, resulting in millions of dollars of losses to class members.
Scott+Scott has significant experience in prosecuting major securities, antitrust, and employee retirement plan actions throughout the United States. The firm represents pension funds, foundations, individuals, and other entities worldwide.