October 2, 2020 - An investor in shares of Credit Acceptance Corporation (NASDAQ: CACC) filed a lawsuit in the U.S. District Court for the Eastern District of Michigan over alleged violations of Federal Securities Laws by Credit Acceptance Corporation in connection with certain allegedly false and misleading statements made between November 1, 2019 and August 28, 2020.

Southfield, MI based Credit Acceptance Corporation provides financing programs, and related products and services to independent and franchised automobile dealers in the United States. Credit Acceptance Corporation reported that its annual Total Revenue rose from over $1.28 billion in 2018 to over $1.48 billion in 2019, and that its Net Income increased from $574 million in 2018 to $656.10 million in 2019.

On August 13, 2020, Credit Acceptance Corporation (NASDAQ: CACC) disclosed that on August 11, 2020, the Company had received subpoenas from the Attorney General of the State of Maryland and from the Attorney General of the State of New Jersey. Describing the subpoenas as substantively identical to one another, Credit Acceptance advised investors that the subpoenas both relat[ed] to the Company's repossession and sale policies and procedures and the Company's origination and collection policies and procedures. Taken together with previously disclosed subpoenas received in March 2016 and April 2020, Credit Acceptance advised investors that the inquiries it faced now related to its operations in 39 states.

Shares of Credit Acceptance Corporation (NASDAQ: CACC) declined from $539 per share on August 11, 2020, to as low as $456.33 per share on August 27, 2020.

According to the complaint the plaintiff alleges on behalf of purchasers of Credit Acceptance Corporation (NASDAQ: CACC) common shares between November 1, 2019 and August 28, 2020, that the defendants violated Federal Securities Laws.

More specifically, the plaintiff claims that between November 1, 2019 and August 28, 2020, the Defendants failed to disclose to investors that the Company was topping off the pools of loans that they packaged and securitized with higher-risk loans, that Credit Acceptance was making high-interest subprime auto loans to borrowers that the Company knew borrowers would be unable to repay, that the borrowers were subject to hidden finance charges, resulting in loans exceeding the usury rate ceiling mandated by state law, that Credit Acceptance took excessive and illegal measures to collect debt from defaulted borrowers, that, as a result, the Company was likely to face regulatory scrutiny and possible penalties from various regulators or lawsuits, and that, as a result of the foregoing, Defendant’s positive statements about the Company’s business, operations, and adherence to appropriate laws and regulations were materially misleading and/or lacked a reasonable basis.