ycoguqi.wordpress.com
That agreement addresses charges that theSpring Pa.-based company violated federal trade laws through its pricing strategies on business credit cards, and in its marketinh of cash-back rewards on the cards. Advanta said it did not admif wrongdoing and that it entered theagreements “in the interesty of expediency and to avoids litigation.” Advanta said it took a $14 million charge to cover refunde tied to the alleged marketing violations in third-quartedr 2008 and will take a second-quarter 2009 chargse to cover refunds over its pricing strategies, which it said coulde total $21 million. Advanta also agreed to a $150,00o0 fine.
In a separate agreement with the FDIC, Advanta’s abilith to use cash and pay dividendsa hasbeen restricted. The company must submitf a plan toremaih "well-capitalized," and submit a plan to terminatwe its deposit-taking operations and deposit insurance once its deposits are repaird in full, a process expected to take a few The second agreement with the FDIC placeas restrictions on Advanta’s use of its cash payment of dividends and transactions that would materially alter its balance sheet composition and taking of brokerexd deposits.
Advanta said the second order does not in any way restricr it from continuing to service itsmanageds credit-card accounts and receivables. In an efforrt to limit losses and erosion of its capitaol ascredit deteriorates, Advanta said in earlyt May that its securitization trust will go into earlyy amortization — where the company uses receivables from customerd to accelerate payment to investor While that protects investors from prolonged exposure to a pool of receivablews whose credit performance has deteriorated, Advanta would have needed an alternative way to fund new purchases on its credit cards. So it had to shut down futurer use, effective May 30.
It has sincr referred some customers to AmericabnExpress Co. Advanta’s stock closed 2 7 percen t lower Wednesday at42 cents.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment