Court Grants Class Certification in DFC Global Corp. Securities Class Action

8/4/2016 - Judge Berle M. Schiller of the United States District Court for the Eastern District of Pennsylvania has granted class certification in the securities class action involving DFC Global Corp.  Barrack Rodos & Bacine serves as co-lead counsel in the DFC Global case, representing a Lead Plaintiff group consisting of three institutional investors.  The complaint in the case alleges that DFC Global Corp., a payday lender with core operations in the United Kingdom, and members of its senior management team, made false and misleading statements about the company’s lending practices, claiming that those practices were “conservative” or “responsible.” The complaint also alleges, among other things, that DFC Global habitually extended loans to individuals who could not repay them and repeatedly rolled over loans to borrowers, without any additional credit assessment, thereby avoiding reporting defaults.  In June 2015, Judge Schiller denied the defendants’ motions to dismiss the complaint.  

Lead Plaintiffs moved to certify the class in October 2015.  In opposing the motion, defendants attacked Lead Plaintiffs’ and Lead Counsel’s oversight of the litigation, Lead Plaintiffs’ adequacy to serve as class representatives, and the typicality of the Lead Plaintiffs’ claims.  Judge Schiller rejected every argument advanced by defendants:  “There are no conflicts that would render Lead Plaintiffs unable to protect the interests of the class.  There is also nothing in the record that would lead this Court to conclude that counsel is unable to adequately represent the class.”

In his opinion, Judge Schiller analyzed the work performed by experts for both sides.  He reviewed the work done by Lead Plaintiffs’ expert to support the proposition that DFC Global’s stock traded in an efficient market during the class period – a key element to maintain a securities class action – and the work that the defendants’ expert did in seeking to undercut that conclusion. The Court concluded that the Lead Plaintiffs “have the better of this battle of the experts.”  Specifically, the Court found that defendants’ expert had not challenged the underlying market-related facts highlighted by the Lead Plaintiffs’ expert, and that Lead Plaintiffs’ expert had shown that DFC Global’s stock reacted significantly on the dates when DFC allegedly disclosed the truth about its business operations.   The Court accepted in full all of the Lead Plaintiffs’ arguments in support of the class motion and rejected all of the defendants’ arguments, concluding that “Dr. Hartzmark [Lead Plaintiffs’ expert] has data underlying his conclusions and Dr. Marcus [defendants’ expert] just has noise.”  Click here for the Court’s opinion.

This decision allows the Lead Plaintiffs to move forward with the prosecution of this case as a class action on behalf of all investors (excluding defendants and their affiliates) who purchased DFC Global common stock during the class period from January 28, 2011 through February 3, 2014.  Discovery is ongoing in the case.

If you have any questions about the litigation against DFC Global in general or the decision on the class motion in particular, please contact BR&B partner Lisa Port  at