SAN DIEGO and BERWYN, Pa., Dec. 3, 2013 /PRNewswire/ -- Shareholder rights law firm Robbins Arroyo LLP announces that an investor of DFC Global Corp. (NASDAQ: DLLR) has filed a federal securities fraud class action complaint in the U.S. District Court for the Eastern District of Pennsylvania. The complaint alleges that the company and certain of its officers violated the Securities and Exchange Act of 1934 between January 28, 2011 and August 22, 2013 (the "Class Period"). DFC Global, through its subsidiaries, provides retail financial services to unbanked and under-banked consumers and small businesses.
DFC Global Accused of Failing to Comply with Government Regulations
Shares of DFC Global fell $3.60, or nearly 22%, to close at $13.04 on April 1, 2013, when the company preannounced that its loss rate for the third quarter 2013 rose to 25%, as compared to 20.6% year-over-year, caused by significant loan defaults in the United Kingdom. Then, on August 22, 2013, DFC Global shares fell an additional $4.59, or 28%, to close at $11.31 following the announcement an increase in its fourth quarter loss provision of 25.7%. In addition, the company disclosed that the company would incur a recurring expense of $10-$15 million in regulatory, legal, audit, and compliance-related costs stemming from its payday lending program.
According to the complaint, DFC Global made material misrepresentations regarding the company's compliance with government regulations, its lending practices, and underwriting decisions. Further, the complaint alleges that DFC Global knowingly issued false earnings guidance and misrepresented loss rates for its loans. Specifically, DFC Global is accused of issuing high-fee predatory loans that could not have been repaid, refinancing certain loans as a means to delay defaults, and failing to conduct proper affordability reviews on its customers. As a result, the company's common stock traded at artificially inflated prices throughout the Class Period.
DFC Global Shareholders Are Encouraged to Contact Shareholder Rights Law Firm Robbins Arroyo
If you invested in DFC Global and would like to discuss your shareholder rights, please contact attorney Darnell R. Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the information form on the firm's shareholder rights blog: www.robbinsarroyo.com/shareholders-rights-blog/dfc-global-corp
Robbins Arroyo LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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SOURCE Robbins Arroyo LLP