Santander Consumer Holdings USA Securities Class Action Provides $39 Million to Investors

Subprime Auto Lender's IPO Led to Class Action

Santander Consumer USA Holdings

  • Class Period: 01/23/2014 -- 06/12/2014
  • Settlement Fund: $47,000,000.00
  • Claim Filing Deadline: 01/04/2021
  • Eligible securities: Common stock

We have seen plenty of settlements from the subprime housing market collapse in 2008, but what about subprime auto-lending? Well, you’re in luck. We have one today. Santandar Consumer USA Holdings recently settled a securities class action suit indirectly based on the subprime vehicle market. The total settlement fund is $47 million, and claim forms are due on January 4, 2021.

Santander Consumer USA Holdings, aka SCUSA, is a subprime auto-lender that had its IPO in January of 2014. According to the plaintiff complaint, SCUSA “enticed investors promises of a payout of 30% of its annual earnings in the form of dividends.” This was an unrealistic prediction, and a misleading one, according to the plaintiffs, since SCUSA did not disclose how beholden the company was to it’s parent company, Santander USA Holdings, aka SHUSA. SHUSA held 60% of the shares of SCUSA, and its practices were regulated by the Dodd–Frank Wall Street Reform and Consumer Protection Act, which in turn bound SCUSA's practices to its major shareholder's regulations. SHUSA? Well, their parent company is the Spanish bank Banco Santander. It really is Santanders of various forms all the way down.

Confused? According to the plainitff attorneys, so were SCUSA's leaders. In the documents that SCUSA presented to investors before its IPO, the company made no mention of how SHUSA’s regulation would pertain to SCUSA. In fact, plaintiff’s claim, “SCUSA was not even aware of the Federal Reserve's expectations for compliance.” Emphasis in the original complaint.

By March of 2014, SHUSA, SCUSA’s 60% owner, failed its Dodd-Frank mandated stress. The plaintiff’s complaint states that “As the truth was gradually revealed, SCUSA's stock price dropped substantially, on enormous volumes on the NYSE, from the $24 IPO price to as low as $18.99 during the relevant time period.”

If you traded SCUSA common stock during the relevant period, please let us know. Or, if you are just confused about all these different Santanders and want to talk this out, then give us a call. We’d be happy to sort all this out.

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