SAN DIEGO – Zeldes & Haeggquist, LLP, a shareholder and consumer rights litigation firm, has commenced an investigation into The Cash Store Financial Services Inc. (“CSFS”) (TSX: CSF; NYSE: CSFS) to determine whether it has violated the federal securities laws by knowingly or recklessly making materially false and/or misleading public statements concerning the CSFS’s business, operations, and prospects.
Founded in 2001 and headquartered in Edmonton, Canada, CSFS operates under the Cash Store Financial and Instaloans names in Canada and the United Kingdom. CSFS primarily offers short-term advances and other financial services to income-earning consumers.
On January 12, 2012, CSFS announced plans to offer $125 million of Senior Secured Notes, the proceeds of which would be used to purchase loan receivable assets from CSFS’s current third-party lenders and for general corporate purposes. Mr. Gordon Reykdal, CSFS’s Chairman and CEO commented: “We believe that this transaction will financially benefit the Company as it will allow us to transition from a broker model to an on balance sheet direct lending model in those jurisdictions that are regulated. This transition is expected to have many benefits, including access to lower-cost capital and committed funding. The financial flexibility offered by the Notes will support future loan growth associated with the maturing of our branches and our expansion plans.” Zeldes & Haeggquist’s investigation concerns whether these statements, as well as CSFS’s unaudited financial statements for the periods ending March 31 and June 30, 2012, and comments related thereto, were materially false and misleading.
On Monday, December 10, 2012, CSFS shares fell 19% after CSFS announced that it would restate financial statements for the three and six months ended March 31, 2012, and three and nine months ended June 30, 2012. CSFS disclosed that it had inappropriately accounted for $36.8 million of $116.3 million paid in the January 2012 acquisition of a portfolio of consumer loans from third-party lenders in violation of U.S. GAAP.
CSFS also announced that it determined that its provision for loan losses on its internally generated loans was understated. As a result, CSFS would record an additional expense of $3.3 million and $3.7 million for the three month periods ended March 31, 2012 and June 30, 2012, respectively. Further, CSFS would restate its disclosures related to internal controls for those periods to include the identification of material weaknesses.
CSFS would later announce the initiation of a special investigation by an independent accounting firm regarding allegations of undisclosed related party transactions in connection with the January 2012 loan portfolio acquisition.
On April 9, 2013, CSFS announced that it had received notice from the NYSE that CSFS was not in compliance with certain NYSE standards for continued listing of its common shares.
If you purchased CSFS securities between January 12, 2012 and January 3, 2013, you may have claims under the federal securities laws. If you wish to discuss this investigation, or have questions about this notice or your legal rights, please contact attorney Amber L. Eck at 619-342-8000, or by email at firstname.lastname@example.org. There is no cost to you.