A class action lawsuit was filed on November 18, 1998 in the United States District Court for the Northern District of Texas on behalf of purchasers of FirstPlus common stock on the open market from June 5, 1997 through November 2, 1998, inclusive. The complaint alleges that FirstPlus had misrepresented the riskiness of the loans it originated and thus overreported the gain-on-sale revenue recognized by the Company in connection with the securitization of those loans. Specifically, defendants falsely represented that the risk of prepayment was being addressed, and that because a significant number of loans in its portfolio carried prepayment penalties, FirstPlus had achieved a much stronger financial position and had positioned itself for continued growth and profitability. Defendants also touted FirstPlus' skill in building its customer base and the resulting lower risk loans that comprised the Company's portfolio. Defendants claimed that the Company maintained a low risk portfolio because of its skill in the evaluation and likelihood of customer default. Defendants failed to disclose, or recklessly disregarded, that to remain competitive, the Company was offering loans to customers with no equity and/or to customers considered high credit risks, thereby increasing the risk of default in FirstPlus' portfolio. On or about November 3, 1998, when FirstPlus finally disclosed that its core market had a sharply lower growth rate, that it was experiencing a declining EPS, and that it would have to sell off major portions of its business to avoid bankruptcy, FirstPlus stock dropped to under $4 per share, over a 90% drop from its Class Period high of just over $61 per share.

Update

The parties have reached a tentative settlement in this action. For details on the proposed settlement and to download a claim form, please go to the claims administrator's website, at www.gilardi.com. In order to share in the recovery, you must submit a claim form by December 19, 2003.