Credit Acceptance provides financing programs, and related products and services to independent and franchised automobile dealers in the United States. These programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing, as 95% of Credit Acceptance’s loans are considered subprime.
The Complaint asserts claims for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 against Credit Acceptance and certain of its executive officers. The action alleges that during the Class Period, Defendants made materially false and/or misleading and failed to disclose material adverse facts about the Company’s business, operations, and adherence to the appropriate laws and regulations. Specifically, Defendants failed to disclose to investors: (i) that the Company was topping off the pools of loans that they packaged and securitized with higher-risk loans; (ii) that Credit Acceptance was making high-interest subprime auto loans to borrowers that the Company knew borrowers would be unable to repay; (iii) that the borrowers were subject to hidden finance charges, resulting in loans exceeding the usury rate ceiling mandated by state law; (iv) that Credit Acceptance took excessive and illegal measures to collect debt from defaulted borrowers; (v) that, as a result, the Company was likely to face regulatory scrutiny and possible penalties from various regulators or lawsuits; and (vi) that, as a result of the foregoing, Defendants positive statements about the Company’s business, operations, and adherence to appropriate laws and regulations were materially misleading and/or lacked a reasonable basis.
The alleged class includes: All persons or entities that purchased or otherwise acquired Credit Acceptance common stock from November 1, 2019 through August 28, 2020, inclusive.