|Company:||CIT Group Inc|
|Class Period:||Apr-18-07 to Mar-5-08|
|Lead Plaintiff Deadline:||Oct-21-08|
|Court:||Southern District of New York|
The Complaint charges CIT and certain of its officers and directors with violations of the Securities Exchange Act of 1934. CIT is a commercial finance company that provides financial products and advisory services. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company had made tens of millions of dollars of loans to students attending Silver State Helicopter ("Silver State"), and that there was little chance of their repayment; (2) that the Company should have taken a write-down for the Silver State loans in its financial statements; (3) that as a result, the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (4) that the Company lacked adequate internal and financial controls; and (5) that, as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times.
Up until very recently, CIT had participated in the student loan market through its Student Loan Xpress unit. The majority of CIT's private student loans were made to non-traditional schools, which have a lower graduation rate than traditional schools (the graduation rate being a critical factor in a borrower's ability to pay back a loan). CIT had been making private loans to students attending Silver State, a non-traditional school.
As of December 31, 2007, Silver State students accounted for $196 million in CIT's outstanding student loans, an astounding 32 percent of CIT's $599.3 million of finance receivables related to private student loans. On January 31, 2008, Citibank announced that it would refuse to make any additional private student loans to Silver State students, due to its strong suspicion that the loans would not be repaid. The following day, on February 1, 2008, Silver State declared bankruptcy and ceased all operations. It was subsequently revealed that Silver State had assets of only $50,000 and liabilities in the tens of millions of dollars.
On March 6, 2008, investors were shocked when Keefe, Bruyette & Woods issued an analyst report that lowered CIT's first quarter 2008 earnings per share estimate from $0.76 to $0.08. The report stated that CIT would be forced to write-down a significant portion of its private student loan portfolio. Upon the release of this news, the Company's shares fell $4.50 per share, or 22.10 percent, to close on March 6, 2008 at $15.86 per share, on unusually heavy trading volume.
If you are a member of the class described above, you may, not later than September 23, 2008, move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the purported class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.
If you acquired the securities of the defendants during the Class Period you may, no later than the Lead Plaintiff Deadline shown above, request that the Court appoint you as lead plaintiff through counsel of your choice. You may also choose to remain an absent class member. A lead plaintiff must meet certain requirements.