Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit Against Advanta Corp.

Wed Oct 14, 2009 5:24pm EDT

* Reuters is not responsible for the content in this press release.

SAN DIEGO--(Business Wire)--
Coughlin Stoia Geller Rudman & Robbins LLP ("Coughlin Stoia")
( today announced that a class action has
been commenced on behalf of an institutional investor in the United States
District Court for the Eastern District of Pennsylvania on behalf of purchasers
of Advanta Corp. ("Advanta") (NASDAQ:ADVNA) (NASDAQ:ADVNB) Class A and/or Class
B common stock during the period between October 31, 2006 and November 27, 2007
(the "Class Period"). 

If you wish to serve as lead plaintiff, you must move the Court no later than 60
days from today. If you wish to discuss this action or have any questions
concerning this notice or your rights or interests, please contact plaintiff`s
counsel, Darren Robbins of Coughlin Stoia at 800-449-4900 or 619-231-1058, or
via e-mail at If you are a member of this class, you can view a
copy of the complaint as filed or join this class action online at Any member of the putative 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. 

The complaint charges Advanta and certain of its officers and directors with
violations of the Securities Exchange Act of 1934. Advanta was formerly one of
the nation`s largest issuers of MasterCard and some Visa credit cards to small
businesses and professionals in the United States, through Advanta Bank Corp., a
subsidiary of Advanta. 

The complaint alleges that during the Class Period, defendants issued materially
false and misleading statements regarding the Company`s business and financial
results. Specifically, the complaint alleges that defendants engaged in improper
behavior that harmed Advanta`s investors by failing to disclose the impact of
the economic environment and the deteriorating credit trends on its business and
that the Company failed to adequately and timely record losses for its impaired
loans and customer delinquencies, causing its financial results to be materially
false. Defendants also concealed the adverse effects the Company`s manipulations
of its cash rewards program was having on its business. As a result of
defendants` false statements, Advanta`s stock traded at artificially inflated
prices during the Class Period, reaching a high of $34.07 per share on June 19,

Then, on November 27, 2007, Advanta held a conference call with analysts and
investors to discuss the Company`s business performance. Advanta announced that
due to the volatility of the economy, guidance for 2008 would not be released.
Additionally, since the release of the third quarter 2007 results on October 25,
2007, a higher percentage of customers had become delinquent on their credit
card payments and a lower percentage of customers made payments, indicating a
trend of charge-offs. After these disclosures, Advanta stock dropped, closing on
November 27, 2007 at $11.06 per share, and falling to as low as $9.35 per share
on November 28, 2007, a decline of 72% from Advanta`s Class Period high of
$34.07 per share in June 2007. 

According to the complaint, the true facts, which were known by the defendants
but concealed from the investing public during the Class Period, were as
follows: (a) Advanta`s assets contained tens of millions of dollars worth of
impaired credit card receivables for which the Company had not accrued losses;
(b) prior to and during the Class Period, Advanta had been extremely aggressive
in granting credit to customers without verifying the customers` ability to pay,
to such a degree that by the summer of 2009, Advanta customers` default rate
would be almost six times worse than industry average; (c) Advanta`s
manipulation of its cash rewards program angered customers and caused the
Company to lose good, creditworthy customers; (d) Advanta`s credit receivables
were unduly risky due to the Company`s practice of issuing credit cards to small
business owners without, in many instances, verifying income; (e) defendants
failed to properly account for Advanta`s continuing delinquent customers and the
credit trends in the Company`s portfolio, resulting ultimately in large charges
to reflect impairments; and (f) the Company was not on track to be profitable in

Plaintiff seeks to recover damages on behalf of all purchasers of Advanta Class
A and/or Class B common stock during the Class Period (the "Class"). The
plaintiff is represented by Coughlin Stoia, which has expertise in prosecuting
investor class actions and extensive experience in actions involving financial

Coughlin Stoia, a 190-lawyer firm with offices in San Diego, San Francisco, Los
Angeles, New York, Boca Raton, Washington, D.C., Philadelphia and Atlanta, is
active in major litigations pending in federal and state courts throughout the
United States and has taken a leading role in many important actions on behalf
of defrauded investors, consumers, and companies, as well as victims of human
rights violations. The Coughlin Stoia Web site ( has more
information about the firm.

Coughlin Stoia Geller Rudman & Robbins LLP
Darren Robbins, 800-449-4900 or 619-231-1058

Copyright Business Wire 2009

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.