SAN DIEGO & DETROIT--(BUSINESS WIRE)--Shareholder rights law firm Robbins Arroyo LLP announces that a class action complaint was filed against Ally Financial Inc. (NYSE: ALLY) in the State of Michigan Circuit Court for the County of Wayne. The complaint is brought on behalf of all purchasers of Ally securities pursuant to the company's April 11, 2014 Initial Public Offering ("IPO") for alleged violations of the Securities Act of 1933 by Ally's officers and directors. Ally, a diversified financial services company, provides a range of financial products and services primarily to automotive dealers and their retail customers in the United States.
View this information on the law firm's Shareholder Rights Blog:
Ally Accused of Failing to Reveal Negative Impact of Subprime Auto Loans
According to the complaint, on April 11, 2014, Ally conducted the IPO, selling 95 million common shares at a price of $25 per share. In December 2014, Ally revealed that it had received a subpoena from the U.S. Department of Justice as part of an investigation "related to subprime automotive finance and related securitization activities" in addition to an inquiry by the U.S. Securities and Exchange Commission ("SEC"). Ally officials allegedly omitted facts that were required to be stated in the registration statement and incorporated offering materials that the company filed with the SEC in support of the IPO. Specifically, the complaint alleges that Ally officials failed to disclose: (1) the severity of rising subprime auto loan delinquency rates; (2) deficient underwriting measures employed in the origination of its subprime auto loans; and (3) aggressive tactics used with low-income borrowers in order to raise approximately $2.375 billion in the company's April 2014 IPO.
In June 2016, news began circulating in the media that car loans were seen as an increased risk for auto lenders due to higher default rates from increased subprime lending. On June 3, 2016, Automotive News published an article stating that Ally was "dialing back on lending to consumers at the lower end of the subprime credit score spectrum." Since news of Ally's struggles hit the market, Ally's stock declined over 22% to close at $16.08 per share on June 14, 2016. On July 28, 2016, The Wall Street Journal reported that four of the largest auto lenders by loan volume, including Ally, had stated on second quarter earnings calls that used car prices are at risk of falling.
Ally Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, DDonahue@robbinsarroyo.com, or via the shareholder information form on the firm's website.
Robbins Arroyo LLP is a nationally recognized leader in shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.
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