The parent of credit card issuer MBNA America Bank and no less than eight officers and directors of the company were hit with three separate shareholder class action lawsuits last week. Law firms Milberg Weiss Bershad & Shulman of New York, Schatz & Nobel of Hartford, Conn. and Schiffrin & Barroway of Radnor, Pa. all filed suits on behalf of investors in MBNA in the U.S. District Court for the District of Delaware.
The three suits have a number of points in common. One of the primary points is that in January MBNA projected annual income growth of 10% and in the following weeks company insiders sold over 1 million shares in the company. On April 21, the company announced first-quarter income was down 93% year-over-year, "making it highly unlikely that the company would be able to achieve 10% growth," according to a release from Milberg Weiss. The suits also take issue with MBNA's $206 million write-down of its interest-only strip receivable, a measure of outstanding credit card interest payments.
The Schiffrin suit alleges the company failed to disclose and misrepresented restructuring charges associated with the company's early retirement plan for its workers, as well as the fact the company was experiencing a high level of customer delinquencies. Furthermore, the Schiffrin suit says the company misrepresented the degree to which its customers were paying down their credit card bills.
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