If the class action settlement numbers are accurate, $10 million up front and $ 3 million more if cash flow from operations exceed $75 million, then I consider that a very positive sign.
So, the stock fell from 17 to 3, causing losses to investors of about $430 million. Bass/Hayman launched an aggressive attack on the company with claims of it being a Ponzi scheme, improper accounting, concentrating lending to Centurian who they claimed was insolvent, engaging in transactions that were not arms length, and more.
The FBI raided the offices and the SEC investigated for 4 years. You can read the complaint for yourself, but I don’t see where they found much wrongdoing.
As the dust is settling, it appears that management settled with the SEC for $8 million and the class action may be in the process of being settled for $10 million.
$10 million is about 30 cents per share. Nothing compared to the market losses.
And the entire management team that oversaw everything is allowed to remain in place. None have left the company. These fines, in my opinion, are closer to a ‘slap on the wrist,’ compared to what they would have been if the allegations were true.
I’m long the stock so, perhaps, I’m interpreting things the way I want to see them. But this makes me think there’s a good chance of optimistic loan values in the portfolio. Time will tell once we see the financials.
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