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.
