LeBlanc & Waddell, LLC Announces Class Action Lawsuit Against NextCard, Inc.

Business Editors

BATON ROUGE, La.--(BUSINESS WIRE)--Nov. 12, 2001

A shareholder recently sued NextCard, Inc. (Nasdaq: NXCD) in federal court, claiming that the credit card company misled investors about being well capitalized, the law firm of LeBlanc & Waddell LLC said.

The class action was filed in the U.S. District Court for the Northern District of California and seeks damages for violations of federal securities laws on behalf of all investors who bought NextCard stock between March 30, 2000 and October 30, 2001 (the Class Period).

The complaint says that NextCard and several top officers disseminated false and misleading information about its capitalization in its filings with the Securities and Exchange Commission for the 1999 and 2000 fiscal years and for part of 2001. The misleading statements concerned the company's wholly owned subsidiary, NextBank, and its classification under federal banking guidelines. Though the company repeatedly described NextBank in SEC filings as "well capitalized" during the Class Period, the lawsuit alleges that NextBank was in fact significantly undercapitalized. NextCard maintained this false "well capitalized" status by improperly classifying credit losses as fraud losses.

In the third quarter of 2001, federal regulators put an abrupt halt to these practices, forcing the company to reclassify its fraud losses as credit losses and to increase its allowances for loan losses. Once the credit losses were properly categorized, NextBank became "significantly undercapitalized" -- a full $140 million below the level required for "well capitalized" status.

On October 31, 2001, NextCard revealed that it was unable ...