The First Marblehead Corporation Sued by Investor
Robbins Arroyo LLP announce that an investor of The First Marblehead Corporation (NYSE: FMD) (“First Marblehead”) has filed a complaint in the U.S. District Court for the District of Massachusetts. The complaint alleges that the company and certain of its officers violated the Securities Exchange Act of 1934 between November 4, 2010 and August 15, 2013 (the “Class Period”). First Marblehead is a specialty finance company that provides outsourcing services for designing and implementing private education loan programs to national and regional financial institutions and educational institutions in the United States.
First Marblehead Accused of Making False and Misleading Statements
According to the complaint, certain First Marblehead officers made false and misleading statements and failed to disclose information regarding the company’s operations and business prospects. Specifically, the complaint alleges that, throughout the Class Period, the company and certain of its officers disseminated false and misleading statements and/or failed to disclose that the company adopted a questionable position regarding the tax implications of the sale of certain trust certificates, likely exposing the company to a large tax liability. Further, because the company lacked adequate internal controls over financial reporting, First Marblehead failed to disclose that relevant tax guidance prohibited certain refunds and loss accruals claimed by the company. As a result of the foregoing, First Marblehead shares traded at artificially inflated prices during the Class Period.
First Marblehead Stock Drops on News of $300 Million Tax Liability
On August 15, 2013, according to the complaint, First Marblehead issued a press release announcing the results of an ongoing Internal Revenue Service audit in connection with the sale of certain trust certificates. According to the release, First Marblehead would incur an additional tax liability of approximately $300 million plus interest, an amount nearly twice the size of the company’s market capitalization. On this news, First Marblehead shares dropped over 36%, or $.57 per share, to close at $1.00 on August 16, 2013.
If you invested in First Marblehead and would like to discuss your shareholder rights, please contact attorney Darnell R. Donahue at (800) 350-6003, firstname.lastname@example.org, or or you can complete the form below and we will contact you directly.
Shareholder InformationSend This Post