Higher One’s Troubles Mount
by Thomas MacMillan | May 29, 2014 7:10 am
Posted to: Business/ Economic Development
Already facing federal penalties for the second time, New Haven tech darling Higher One now has a fresh a lawsuit on its hands—brought by a disgruntled shareholder.
That shareholder, Brian Perez, filed a lawsuit Tuesday on behalf of all investors like him, possibly setting the stage for a class-action suit against Higher One.
Perez seeks damages from Higher One for allegedly violating the Securities Exchange Act of 1934 and failing to disclose that it was doing so. The company now faces penalties from the Federal Reserve for alleged violations related to Higher One’s marketing of its debit accounts for university financial aid refunds. That news caused Higher One shares to drop 14 percent, the lawsuit states. The decline in market value means significant losses for Perez and others like him, the lawsuit states. The suit quotes public filings by the company that neglected or minimized the impact of federal investigations.
Read the lawsuit here.
“We believe that the allegations in the complaint are meritless and we intend to vigorously defend ourselves,” Higher One spokeswoman Shoba Lemoine said.
Higher One, founded in 2000 by Yale undergrads, offers financial disbursement services for colleges and universities. The company remodeled and occupied a portion of the old WInchester rifle factory, becoming the poster child for new-economy high-tech jobs generation in New Haven.
In 2012, Higher One came under fire from the federal goverment for its marketing practices. The company agreed to return about $11 million to college students for overcharged fees, and agreed to change the way it imposes fees and provide clearer disclosures.
This month, Higher One announced that it again faces federal penalties for its marketing practices. That disclosure led to Tuesday’s lawsuit.
Tags: Higher One
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Too bad you can’t sue BOD’s for bad judgment if they were acting in good faith.
This is unfortunate. Higher One was a great local success story. It looks like they’re in quite a bit of trouble on a number of different fronts. Allegedly misleading investors and customers is the kind of thing that can tank a company overnight. If this turns out to be true, I can’t imagine the company making it out in one piece.