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Imperial Holdings: Here Come the Downgrades

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Here come the downgrades.

Tuesday, shares of Imperial Holdings were halted, and its office was raided by the FBI, with unusual activity noted in options on its stock.

As of yesterday, three analysts covered the stock and rated it a "buy" or "strong buy" according to the website, Starmine. All three analysts work at firms that helped underwrite the stock when it went public in February, 2011.

Imperial Holdings is a specialty finance company focused on providing premium financing for life insurance policies.

Today, FBR Capital Markets downgraded its rating to "Market Perform" from "Outperform" and reduced its price target to $6.20 from $15.00 or, the value of IFT's reported cash and cash equivalents at the end of Q2 2011.

The reason cited in the report for the downgrade was the disclosure that "...the company and several of its employees (including the chairman and CEO and the president and COO) are under investigation by the U.S. Attorney's Office, District of New Hampshire, with respect to its life finance business."

Wunderlich Securities cut its rating on Imperial holdings to a "hold" from a "buy" and removed it from the company's "Best Ideas" list. JMP Securities has suspended its rating on the stock according to the website, flyonthewall.com.

In a press release, the company acknowledged that it was under federal investigation and that "...certain of its employees, including its chairman and chief executive officer, and its president and chief operating officer, are under investigation in the District of New Hampshire with respect to its life finance business." The company is cooperating and expects to return to "normal operations" today.

The stock opened for trading Wednesday and promptly traded down to its all-time low of $1.55 per share.

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