BR&B Clients in Group Appointed as Lead Plaintiff in DFC Global Corp. Securities Litigation

4/10/2014 - The Honorable Berle M. Schiller has appointed an institutional investor group including BR&B clients as lead plaintiff and has appointed BR&B as co-lead counsel in West Palm Beach Police Pension Fund v. DFC Global Corp., et al., Case No. 13-cv-6731, pending in the United States District Court for the Eastern District of Pennsylvania.  Click here for a copy of Judge Schiller’s opinion

The class action was brought on behalf of purchasers of DFC Global’s common stock between January 28, 2011 and August 22, 2013, and seeks to recover damages against the defendants as a result of alleged violations of the federal securities laws.  DFC Global is a non-bank provider of alternative financial services such as payday loans and secured pawn loans.  The class action alleges that DFC Global misrepresented to investors that it complied with government regulations and guidance regarding its lending practices, and that the company made “prudent,” “conservative,” and “responsible” underwriting decisions when making loans.  The action alleges that DFC Global knew, but failed to disclose, that it systematically issued high-fee predatory loans to consumers who had no reasonable means to repay the loans and that it continuously rolled over or refinanced its loans in order to delay or avoid defaults. 

On March 6, 2013, the United Kingdom’s Office of Fair Trading announced the results of an investigation that it was conducting on the entire payday lending industry, reporting that it had uncovered “deep-rooted” evidence of “widespread irresponsible lending” by the leading 50 payday lenders and a “failure to comply with the standards” imposed in the U.K.  After the market closed on August 22, 2013, DFC Global announced soaring loan defaults in the U.K. and a sharp increase in the company’s loan loss provision.  The company also disclosed that it expected to incur recurring expenses for regulatory, legal, audit, and compliance-related costs relating to its payday lending program.  This news caused the price of DFC Global stock to fall nearly 29%, from a pre-announcement closing price of $15.90 per share to close at $11.31 per share on August 23, 2014.

In its opinion, the district court concluded that Barrack, Rodos & Bacine and our co-counsel “have the resources, knowledge, and drive to vigorously and efficiently prosecute this litigation and protect the interests of the class.” 

If you have any questions about the case against DFC Global, please email BR&B attorneys Jeffrey W. Golan, Jeffrey A. Barrack or Lisa M. Lamb or contact them by telephone at (215) 963-0600.