The Cash Store Financial Services Inc. says a class-action proceeding has been filed in the United States against the company and certain of its current and former officers.
Cash Stores says it plans to “defend itself vigorously” against claims that it overstated its income and understated its losses and liabilities.
The company said the action, filed in U.S. District Court of the Southern District of New York, is “substantially similar” to recently announced proposed class-action proceedings in Alberta and Ontario and a previously disclosed complaint filed by Globis Capital Partners LP.
The proposed U.S. class action concerns alleged misrepresentations made in the company’s quarterly and annual financial statements between Nov. 24, 2010, and May 13, 2013.
In particular, the U.S. complaint alleges that Cash Store Financial overvalued the consumer loan portfolio acquired from third-party lenders, overstated its net income, understated losses on its internal consumer loan portfolio and understated its liabilities associated with the settlement of a British Columbia class action.
“The company will defend itself vigorously against what it believes are unfounded allegations,” it said in release.
Cash Store operates 513 branches across Canada under the Cash Store Financial and Instaloans banners, as well as 27 locations in the United Kingdom. It provides short-term advances and other financial services to people who not be able to obtain them from traditional lenders.
The company does not own or provide any lending services in the United States.