SAN FRANCISCO, Dec. 19, 2001 (PRIMEZONE) -- NextCard, Inc. (Nasdaq:NXCD) is the subject of a pending securities fraud lawsuit that claims the company misled investors about the state of its finances, Berman DeValerio Pease Tabacco Burt & Pucillo said today.
The class action was filed November 6, 2001 in the U.S. District Court for the Northern District of California as C-01-04153 PJH. It seeks damages for violations of federal securities laws on behalf of all investors who bought NextCard stock between March 30, 2000 and October 30, 2001 (the Class Period). The case is pending before Judge Phyllis J. Hamilton. Investors seeking to become lead plaintiff in the suit must submit a petition to the court by the end of the month.
Berman DeValerio has represented investors in class actions for nearly two decades. To review the complaint and learn more about becoming a lead plaintiff, visit our Website at www.bermanesq.com.
The complaint says that NextCard and several top officers disseminated false and misleading information about its capitalization in filings with the Securities and Exchange Commission for the 1999 and 2000 fiscal years and for part of 2001. The misleading statements concerned the company's wholly owned subsidiary, NextBank, and its classification under federal banking guidelines. Though the company repeatedly described NextBank in SEC filings as "well capitalized" during the Class Period, it was in fact "significantly undercapitalized." NextCard maintained this bogus "well capitalized" status by improperly classifying credit losses as fraud losses.
In the third quarter of 2001, federal regulators put an abrupt halt to these misleading practices, forcing the company to reclassify its fraud losses as credit losses and to increase its allowances for loan losses. Once the credit losses were properly categorized, NextBank became "significantly undercapitalized" -- a full $140 million below the level required for "well capitalized" status.
On October 31, 2001, NextCard revealed that it was unable to provide the needed capital to NextBank and could no longer operate on its own. Stunned investors watched as the company's stock plummeted from a closing price of $5.35 per share on October 30 to a closing price of $0.87 the next day.
The complaint also alleges that one of the individual defendants, NextCard co-founder Jeremy R. Lent, sold $7.5 million worth of stock in illegal insider trades, along with an additional $8.2 million in indirect stock held by the Lent Family Trust.
If you purchased NextCard, Inc. common stock during the period March 30, 2000 through October 30, 2001, you may wish to contact the following attorneys at Berman DeValerio Pease Tabacco Burt & Pucillo to discuss your rights and interests:
Alicia Duff, Esq. Jennifer Abrams, Esq. Jeffrey C. Block, Esq. One Liberty Square 425 California Street, Suite 2025 Boston, MA 02109 San Francisco, CA 94104 (800) 516-9926 (415) 433-3200 law@bermanesq.com law@bermanesq.com
You may also visit us at our website at www.bermanesq.com.
If you wish to apply to be lead plaintiff in this action, a motion must be filed on your behalf with the court no later than December 31, 2001. You may contact the attorneys at Berman DeValerio to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action. To be a member of the class, however, you need not take any action at this time, and you may retain counsel of your own choice. If you decide to seek appointment as lead plaintiff, you may also retain counsel of your choice.
Berman DeValerio Pease Tabacco Burt & Pucillo (www.bermanesq.com) prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations and consumer fraud. The firm consists of 30 attorneys in Boston, San Francisco and West Palm Beach, Florida.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.