Press release from Business Wire
Zeldes Haeggquist & Eck, LLP Announces Investigation of The Cash Store Financial Services, Inc.
Thursday, May 30, 2013
Zeldes Haeggquist & Eck, LLP Announces Investigation of The Cash Store Financial Services, Inc.09:01 EDT Thursday, May 30, 2013
SAN DIEGO (Business Wire) -- Zeldes Haeggquist & Eck, LLP, a shareholder and consumer rights litigation firm, has commenced an investigation into The Cash Store Financial Services Inc. (“CSFS”) (NYSE: CSFS) (TSX: CSF), to determine whether it has violated the federal securities laws by knowingly or recklessly making materially false and/or misleading public statements concerning Cash Store's business operations and prospects.
Beginning on November 24, 2010, Cash Store made a series of statements concerning Cash Store's financial condition that caused Cash Store's shares to trade at an artificially high price. Confirming such, on May 13, 2013 Cash Store advised that its previous reports should not be relied upon and that material weaknesses in internal controls existed during all periods dating back to 2010. Cash Store stock has since fallen approximately 71.25% from $17.10 per share to $3.83, resulting in losses of millions of dollars to purchasers of Cash Store securities. Cash Store stock is no longer trading on the NYSE or the Toronto Stock Exchange.
Specifically, on December 10, 2012, Cash Store revealed that, as a result of ineffective internal controls, it had inappropriately accounted for the acquisition of a large loan portfolio in violation of U.S. GAAP. Instead of accounting for the loan receivable based on fair value, Cash Store instead included a premium that should have been recorded as an expense. Essentially, Cash Store recorded as a profit what was in fact a reduction in Cash Store's income. Cash Store further announced that its provision for loan losses for the three month periods ending March 31, 2012 and June 30, 2012 was understated by $3.3 million and $3.7 million.
On January 3, 2013, Cash Store filed its restated financial statements for the three and six months ended March 31, 2012 and the three and nine months ended June 30, 2012. The restatements revealed that several areas of the income statement and balance sheet required restatement as a result of inappropriate application of GAAP regarding accounting for asset acquisitions; fair value measurement and accounting for loan losses. Overall, the restatement revealed that Cash Store had overstated net income by over $30 million in the first three months ended March 31, 2012.
On April 9, 2013, Cash Store announced that it received notice from the NYSE that it was not in compliance with certain standards for continued listing of its shares and that Cash Store has 18 months from April 2, 2013 to submit a plan to demonstrate its ability to achieve compliance with listing standards.
On May 13, Cash Store announced that it would again have to restate financial statements because the previous annual and interim financial statements improperly calculated the losses accrued due to a lawsuit settlement. Although every financial statement filed with the SEC estimated liability relating to the lawsuit to be approximately $18 million, in reality the losses were $23.3 million. As mentioned, Cash Store advised that previous reports should not be relied upon; Cash Store stock dropped from about $17.10 per share to $3.83 per share; and Cash Store stock is no longer trading on the NYSE or the Toronto Stock Exchange.
If you purchased Cash Store securities between November 24, 2010 and May 13, 2013, you may have claims under the federal securities laws. If you wish to discuss this investigation, or have questions about your legal rights, please contact attorney Amber L. Eck or Aaron M. Olsen at 619-342-8000, or by email at firstname.lastname@example.org or email@example.com. There is no cost to you.
Zeldes Haeggquist & Eck, LLP is a full-service law firm which brings major class actions nationwide on behalf of defrauded investors and consumers and handles a variety of complex business litigation matters. Please visit www.zhlaw.com or our blog for more information about the firm.
Zeldes Haeggquist & Eck, LLP
Amber L. Eck, firstname.lastname@example.org
Aaron M. Olsen, email@example.com