August 26, 2013 (Shareholders Foundation) - An investigation on behalf of investors of The First Marblehead Corporation (NYSE:FMD) shares over potential securities laws violations by The First Marblehead Corporation and certain of its directors and officers in connection certain financial statements was announced.
The investigation by a law firm focuses on possible claims on behalf of purchasers of the securities of The First Marblehead Corporation (NYSE:FMD) concerning whether a series of statements by The First Marblehead Corporation regarding its business, its prospects and its operations were materially false and misleading at the time they were made.
Shares of The First Marblehead Corporation (NYSE:FMD) rose from $0.659 per share in late 2012 to as high as $1.88 per share in late July 2013.
Then on August 15, 2013, The First Marblehead Corporation reported its fourth quarter and ful year financial results. The First Marbleheads Total Revenue rose from $40.71 million for the 12 months period that ended on June 30, 2012 to $46.02 million for the 12 months period that ended on June 30, 2013, while its Net Income of $1.1 billion for the 12 months period that ended on June 30, 2012 turned into a Net Loss of $50.20 million for the 12 months period that ended on June 30, 2013.
Among other things, The First Marblehead Corporation also provided an update on the IRS audit. The First Marblehead Corporation said that its federal income tax returns have been under audit by the Internal Revenue Service (the 'IRS') in connection with the sale of the trust certificate of the NC Residual Owners Trust ('Trust Residuals'). The First Marblehead Corporation said that as part of that audit process, it expects to receive a Notice of Proposed Adjustment ('NOPA'). The First Marblehead Corporation said that while the NOPA, when issued, is an initial IRS position and not a final determination, and as a result, does not require any tax payment at this time, it expects that the NOPA would seek to disallow the loss that generated the tax refunds previously received by the Company as well as require the Company to include in its tax returns any taxable income of the Trust Residuals from the March 31, 2009 sale date through June 30, 2011. The First Marblehead Corporation said that the disallowance of the loss, coupled with the additional taxable income after the sale date, creates a proposed adjustment which The First Marblehead Corporation estimates to be approximately $300 million plus interest.
Shares of The First Marblehead Corporation declined from over $1.80 per share in late July 2013 to $0.913 per share on August 19, 2013.
On August 26, 2013, NYSE:FMD shares closed at $0.924 per share.