Bronstein, Gewirtz & Grossman, LLC Announces Investigation of The Cash Store Financial Service, Inc.
NEW YORK, Dec. 11, 2012 /PRNewswire/ -- Attorney Advertising -- Bronstein, Gewirtz & Grossman, LLC is investigating potential claims on behalf of purchasers of the securities of The Cash Store Financial Services, Inc. ("Cash Store" or the "Company") (NYSE: CSFS), concerning potential violations of federal securities laws.
On Monday December 10, 2012, shares of the Cash Store fell 85 cents or 19% to close at $3.42 after announcing that it will restate financial statements for the three and six months ended March 31, 2012 and three and nine months ended June 30, 2012.
The Company determined while preparing for the September 30, 2012, annual consolidated financial statements that approximately $36.8 million of the total consideration paid to acquire the portfolio of loans represented a premium paid on acquisition, a portfolio of consumer loans from third-party lenders for total consideration of $116.3 million. The pre-existing contractual broker arrangements between the Company and the third-party lenders did not obligate the Company to pay retention payments, compensate for loan losses without cause or provide a guaranteed rate of return on the pool of funds advanced. However, the compensation paid to the third party lenders as part of the transaction recognized the loss of future retention payments and the ability to earn future returns on capital under the existing broker contracts. In accordance with U.S. GAAP, the Company has determined that the premium of $36.8 million should have been recognized as an expense as a settlement of pre-existing business relationships with third-party lenders. The Company will restate the fair value of the loans receivable acquired to $50.0 million and the fair value of intangible assets acquired to $32.0 million with a corresponding deferred tax liability of $2.5 million. The Company will also adjust the interim financial statements for the periods ended March 31, 2012 and June 30, 2012 for any corresponding impact that these restatements have on other financial statement line items. The Company will record an additional expense of $3.3 million and $3.7 million for the three month periods ended March 31, 2012 and June 30, 2012, respectively. As a result of the restatement, the Company will recognize approximately $10 million in additional deferred tax assets.
If you are aware of any facts relating to this investigation, or purchased shares of The Cash Store you can assist this investigation by contacting either Peretz Bronstein or Eitan Kimelman of Bronstein, Gewirtz & Grossman, LLC at 212-697-6484 or via email firstname.lastname@example.org. Those who inquire by e-mail are encouraged to include their mailing address and telephone number.
Bronstein, Gewirtz & Grossman, LLC is a corporate litigation boutique. Our primary expertise is the aggressive pursuit of litigation claims on behalf of our clients. In addition to representing institutions and other investor plaintiffs in class action security litigation, the firm's expertise includes general corporate and commercial litigation, as well as securities arbitration.
Bronstein, Gewirtz & Grossman, LLC
Peretz Bronstein or Eitan Kimelman, 212-697-6484
SOURCE Bronstein, Gewirtz & Grossman, LLC