Pomerantz LLP has filed a class action lawsuit against Higher One Holdings, Inc. ("Higher One" or the "Company") and certain of its officers. The class action, filed in United States District Court, District of Connecticut, and docketed under 3:14-cv-00755, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Higher One securities between August 7, 2012 and May 12, 2014, both dates inclusive (the "Class Period"). This class action seeks to recover damages against Defendants for alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Higher One provides technology-based refund disbursement, payment processing, and data analytics services to higher education institutions and students in the United States. Some of the services it offers include FDIC-insured online checking accounts to students, as well as faculty, staff, and alumni; a debit MasterCard ATM card; and OneAccount Premier and OneAccount Edge for primary account usage.
The Complaint alleges that throughout the Class Period, Defendants made false and/or misleading statements, and failed to disclose material adverse facts about the Company's business, operations, prospects and performance. Specifically, during the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company's marketing and disclosure practices were in violation of the Federal Trade Commission Act; (ii) the Company's allegedly improper marketing and disclosure practices would subject Higher One to potential restitution demands and civil penalties; and (iii) the amounts of potential restitution demands and civil penalties could reach levels that would cause an event of default under the Company's Credit Facility.
On May 12, 2014, in a Form 10-Q filed with the SEC announcing its financial and operating results for the first quarter of 2014, the Company disclosed that it is facing penalties from the Federal Reserve over alleged violations tied to its marketing of a debit account for financial aid refunds. According to the filing, such penalties could trigger a default on the Company's Credit Facility.
On the news, Higher One shares fell $0.90, or over 14% on heavy trading volume, to close at $5.51 on May 13, 2014.