A personal finance company recently announced that it came to a pending securities class action settlement with shareholders.
Bankrate, Inc. noted that it arrived at the proposal with shareholders that would provide them $18 million in cash. This includes all shareholders who acquired stock in the company during the class period between June 16, 2011 and Oct. 15, 2012. However, it still will need to be approved by the court in order to be paid out.
The deal will still have Bankrate deny any allegations that its leaders did anything wrong, or are liable in any way. Much of the funds from the settlement will come from the company's insurers.
While the deal still needs to be approved, once this occurs, there will be documents sent to members of the class to provide them with further information on how the funds will be allocated among those collecting, as well as how the money will be distributed. Additionally, there will be further details on how they will be able to make a settlement fund claim.
Lawsuit filed in 2013
A law office initially filed the litigation last year due to allegations of securities law violations against Bankrate's leaders.
Law firm Bernstein Litowitz Berger and Grossman, LLP, noted that the securities class action lawsuit was filed in the U.S. District Court for the Southern District of New York against the company on behalf of the Arkansas Teacher Retirement System. This included all shareholders who acquired stock in the company during the initial public offering on June 16, 2011, the second offering on Dec. 6, 2011 and during the class period between June 16, 2011, and Oct. 15, 2012.
There were a number of allegations against the leaders of Bankrate that included that the company may have violated the Securities Act of 1933, specifically Sections 11, 12(a)(2) and 15; as well as the Securities Exchange Act of 1934, specifically Sections 10(b), 20(a) and Rule 10b-5.
Specific allegations included that the company made a number of statements about its financial standing that were either false or misleading. This included issues related to the lack of accurate knowledge shareholders had about finances during the IPO, as well as the secondary offering from the company. The stock price rose significantly during that period, and it may have been artificially inflated.