EZCORP Inc (NASDAQ: EZPW) Investor Securities Class Action Lawsuit 07/20/2015

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Company Name(s): 
EZCORP
Case Name: 
EZCORP Shareholder Class Action Lawsuit 07/20/2015
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Proposed
Affected Securities
NASDAQ: EZPW
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
07/20/2015
Class Period Begin: 
10/27/2014
Class Period End: 
07/16/2015
Court of Filing: 
U.S. District Court for the Western District of Texas
Deadline To File for Lead: 
09/18/2015
Date Settled: 
08/05/2019
Settlement Amount: 
$4,875,000
Deadline to Participate in Settlement: 
01/25/2020
Settlement Notice: 
Settlement Proof: 
Summary: 

August 5, 2019 - The court preliminarily approved the settlement.

July 18, 2019 - Parties filed a stipulation of settlement.

May 8, 2017 - The court granted in part and denied in part defendants' motion to dismiss.

December 5, 2016 - Defendants filed a motion to dismiss.

November 4, 2016 - The lead plaintiff filed another amended complaint.

October 18, 2016 - The court granted defendants' motion to dismiss without prejudice with leave to amend the complaint.

February 25, 2016 - Defendants filed a motion to dismiss.

January 11, 2016 - The lead plaintiff filed an amended complaint.

November 3, 2015 - Lead plaintiff and lead counsel were appointed and all cases were consolidated.

September 18, 2015 - Lead plaintiff motions were filed.

July 20, 2015 - An investor in shares of EZCORP Inc (NASDAQ: EZPW) filed a lawsuit in the U.S. District Court for the Western District of Texas over alleged violations of Federal Securities Laws by EZCORP Inc in connection with certain allegedly false and misleading statements made between October 27, 2014 and July 16, 2015.

According to the complaint the plaintiff alleges on behalf of purchasers of EZCORP Inc (NASDAQ: EZPW) common shares between October 27, 2014 and July 16, 2015, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that between October 27, 2014 and July 16, 2015 defendants made allegedly false and/or misleading statements and/or failed to disclose, among others that EZCORP Inc improperly recognized particular structured assets sales, that EZCORP Inc improperly classified certain loans, that, as a result, EZCORP Inc overstated its gains on assets sales and accrued interest revenue, that, as such, EZCORP Inc’s financial statements were not prepared in accordance with Generally Accepted Accounting Principles, that EZCORP Inc lacked adequate internal and financial controls, and that, as a result of the foregoing, defendants’ statements were materially false and misleading at all relevant times.

On April 30, 2015, EZCORP Inc 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 Inc 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 Inc 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 Inc's internal control over financial reporting and deficiencies in the Company's disclosure controls and procedures. On this news, shares of EZCORP Inc fell from $6.72 to $6.48, representing a loss of $0.24 per share or approximately 3.57%.