District Court preliminarily approves $300 million auto insurance settlement
On May 1, the U.S. District Court for the Northern District of California preliminarily approved a $300 million class action settlement resolving claims that a national bank hid misconduct relating to its auto insurance practices. The lead plaintiff alleged that, between November 3, 2016 and August 3, 2017, the defendant made materially false or misleading statements in violation of the Securities Act, which artificially inflated the price of the defendant’s stock. Specifically, the plaintiff maintained that the defendant concealed that it allegedly force-placed unneeded collateral protection insurance (CPI) on many of its customers and failed to refund unearned guaranteed auto protection (GAP) premiums to other customers, which led to more than 20,000 customers having their cars repossessed. The plaintiff further alleged that the defendant was aware of these issues but failed to disclose them to investors or the public, and claimed that the facts did not emerge until they were published by the media in July of 2017. As a result, class members who purchased defendant’s stock during the relevant period allegedly suffered economic losses when the stock price declined as a result of two corrective disclosures that revealed the CPI and GAP issues to investors. A hearing later this year will determine the service fee award and attorneys’ fees and expenses (to be no more than 25 percent of the settlement amount). The defendant denies all claims of wrongdoing.