BOSTON, July 20, 2015 /PRNewswire/ -- Block & Leviton LLP (www.blockesq.com), a securities litigation firm representing investors nationwide, is investigating whether EZCORP, Inc. ("EZCORP" or the "Company") (NASDAQ: EZPW) and certain of its officers and/or directors have violated the federal securities laws. The investigation relates to EZCORP's accounting treatment of Grupo Finmart, a payroll withholding lender headquartered in Mexico City, in which EZCORP has a 76% interest.
On April 30, 2015, EZCORP announced a delay in its earnings release for the second quarter of fiscal 2015 due to an ongoing review of the Company's Grupo Finmart loan portfolio. On this news, shares of EZCORP fell from $9.20 to close at $8.41, representing a decline of $0.79 per share, or 8.59%. Subsequently, on May 20, 2015, the Company announced it had received a notice of noncompliance with NASDAQ's listing requirements due to its failure to timely file its 10Q, causing the stock price to fall 7.3% to close at $8.33 on May 21, 2015.
Then, on July 17, 2015, EZCORP announced it will restate its financial statements for fiscal 2014 and the first quarter of fiscal 2015. The restatement pertains to six structured asset sales, pursuant to which a portion of the Grupo Finmart loan portfolio was sold to a special purpose trust (the "Asset Sales"). Due to certain control rights that Grupo Finmart retained as servicer of the loans, the trusts should have been accounted for as "variable interest entities" and, thus, the Asset Sales should not have been accounted for as sales. Approximately $40 million in gain will be eliminated. EZCORP also failed to adequately identify out-of-payroll loans and to track the aging of non-performing loans. According to the Company, the foregoing issues indicate material weaknesses in EZCORP's internal control over financial reporting and deficiencies in the Company's disclosure controls and procedures. On this news, shares of EZCORP fell from $6.72 to $6.48, representing a loss of $0.24 per share or approximately 3.57%.
If you purchased EZCORP securities prior to July 17, 2015, and have questions about your legal rights or possess information relevant to this investigation, please contact attorney Steven Harte at (617) 398-5600 or email him at Steven@blockesq.com. Confidentiality to whistleblowers or others with relevant information is assured.
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BLOCK & LEVITON LLP
Steven P. Harte, Esq.
SOURCE Block & Leviton LLP