SAN DIEGO — Bernstein Litowitz Berger & Grossmann LLP have announced a proposed settlement in a securities class action with the EZCORP Inc.
In a securities class action involving Automotive Machinists Pension Trust against EZCORP Inc., a small-dollar lender, AMPT has proposed settlement of the action for $5.9 million in cash. If approved, it will resolve all claims in the class action, a news release through PR Newswire reported.
According to Bernstein Litowitz Berger & Grossmann LLP, the firm filed the lawsuit on behalf of the Automotive Machinists Pension Trust against EZCORP Inc., company officers and EZCORP’s controlling shareholder, Phillip Ean Cohen, and MS Pawn Limited Partnership.
The complaint alleged that from April 19, 2012, through Oct. 6, 2014, EZCORP and some of its senior executives “violated provisions of the Exchange Act by disseminating false and misleading press releases, financial statements, filings with the Securities and Exchange Commission and statements during investor conference calls.”
It also was reported by the law firm that during the period from 2012 to 2014, EZCORP and some of its senior executives misrepresented significant facts concerning the business, including the fact that EZCORP and its Cash Genie company were following the correct regulations governing the businesses.
However, EZCORP disclosed that Cash Genie has not obeyed best-practice measures, admitting that it had violated consumer-protection laws. It further added that it was undergoing a reorganization of its business, stating that it was getting out of its online businesses in the United Kingdom and the United States. This resulted in around $110 million in goodwill impairments and other charges, and EZCORP stocks declining significantly.
On Jan. 26, 2015, AMPT appointed Bernstein Litowitz Berger & Grossmann as lead counsel, which filed its consolidated complaint on March 12 of that year. Even though EZCORP filed motions to dismiss, the lead plaintiff opposed, the law firm reported.
On Nov. 29, 2016, the parties announced a $5.9 million settlement, which was granted preliminary approval by the court on Jan. 4, 2017.
A hearing will be held at 10 a.m. April 25, 2017 before Judge Andrew L. Carter Jr. in U.S. District Court, Southern District of New York. A deadline for submission of claims is May 19, 2017.
In 2015, the Consumer Financial Protection Bureau also took action against EZCORP Inc. for illegal debt-collection practices. In a report from the CFPB, the bureau ordered EZCORP to refund $7.5 million to 93,000 consumers, pay $3 million in penalties, and stop collection of remaining payday and installment-loan debts owed by around 130,000 consumers.
CFPB said that it found that EZCORP had “collected debts from consumers through unlawful in-person collection visits at their homes or workplaces, risked exposing consumers’ debts to third parties, falsely threatened consumers with litigation for non-payment of debts, and unfairly made multiple electronic-withdrawal attempts from consumer accounts, causing mounting bank fees.”
According to the CFPB website, EZCORP, headquartered in Austin, Texas, “provided high-cost, short-term, unsecured loans, which also included payday and installment loans in 15 states and more than 500 storefronts.” However, on July 29, EZCORP announced that it would stop offering payday, installment and auto-title loans in the U.S. after the Bureau launched its investigation.
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