PHILADELPHIA, Aug. 26, 2008 (GLOBE NEWSWIRE) -- The law firm of Spector, Roseman & Kodroff, P.C. announces that a securities class action lawsuit was commenced in the United States District Court for the Southern District of New York, on behalf of purchasers of the common stock of CIT Group, Inc. ("CIT" or the "Company") and certain of its executives and directors that alleges violations of the Securities Act of 1933 on behalf of a class (the "Class") consisting of all persons or entities who purchased CIT-Z preferred stock ("CIT-Z") (CITPRZ) pursuant and/or traceable to the Company's registration statement and prospectus filed pursuant to Rule 424(b)(3) with the United States Securities and Exchange Commission on October 17, 2007 (collectively, the "Prospectus") through March 5, 2008.
The Complaint alleges that on October 17, 2007, CIT issued 24,000,000 CIT-Z preferred shares at $25 per unit pursuant to the Prospectus and that the Prospectus was materially false and misleading because it failed to disclose the following: (a) CIT, through its subsidiary Student Loan Xpress ("SLX"), served as the preferred student loan lender of Silver State Helicopter and Silver State was SLX's largest private student loan customer; (b) approximately $196 million of CIT's $364.6 million private student loan portfolio (as of June 30, 2007) was comprised of student loans given to students of Silver State; (c) SLX had materially defective underwriting guidelines and approved virtually all the student loan applications submitted, often requiring little or no evidence of the borrowers' ability to pay the loan and approved loans without requiring documentation; (d) that given the alleged material adverse conditions, Silver State students were unlikely to graduate, which materially increased the likelihood that students would not repay their loans; and (e) given the conditions set forth above, Silver State should have begun writing off its Silver State student loans beginning in the quarter ended June 30, 2007 and failure to do so materially overstated CIT's income in violation of generally accepted accounting principles.
On March 6, 2008, an analyst issued a report stating that CIT would have to write-off the entire Silver State student loan portfolio. On this news, the price of CIT-Z preferred stock declined $3.30 per share from a closing price on March 5, 2008 of $16.30 per share to close at $13.00 per share, a decline of approximately 20%.
If you purchased CIT-Z preferred stock during the Class Period, you may, no later than September 23, 2008, move to be appointed as a Lead Plaintiff in this class action. A Lead Plaintiff is a representative, chosen by the Court, that acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs Courts to assume that the class member(s) with the "largest financial interest" in the outcome of the case will best serve the class in this capacity. Courts have discretion in determining which class member(s) have the "largest financial interest," and have appointed Lead Plaintiffs with substantial losses in both absolute terms and as a percentage of their net worth.
If you have sustained substantial losses in CIT-Z preferred stock during the Class Period, please contact Spector, Roseman & Kodroff, P.C. at classaction@srk-law.com for a more thorough explanation of the Lead Plaintiff selection process. If you have relatively small losses, your ability to participate in any recovery will be protected by the Lead Plaintiff(s), and you need take no affirmative steps at this time.
If you wish to join this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel Robert M. Roseman toll-free at 888-844-5862 or e-mail at classaction@srk-law.com. For more detailed information about the firm, please visit its website at http://www.srk-law.com.
Spector, Roseman & Kodroff, P.C., located in Philadelphia, Pennsylvania, concentrates its practice in complex litigation including actions dealing with securities laws, antitrust, contract and commercial claims. The firm is active in major litigation pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm as lead counsel in numerous major class actions involving violations of the federal securities laws and the federal antitrust laws, and consumer fraud. As a result of the efforts of the firm, and its members, hundreds of millions of dollars have been recovered through judgments and settlements on behalf of thousands of defrauded shareholders and companies.
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