BizLawNews: class action lawyers follow FBI into company

The FBI raided the offices of the company, which describes itself as "a speciality finance company" (it lends to policyholders against their life assurance policies and structured settlements where they are backed by annuities) .

The "raid" (as the US media like to call it) took place on Tuesday evening. As the shares went into freefall on Wednesday, trading was halted for a while as the NYSE questioned what it considered to be unusual options activity: a Reuters report says that the NYSE suspected that some "investors" were "betting on a sharp decline in the stock before the FBI action was widely known."

The company's website at imprl.com carries a statement timed at 20:08 on Tuesday 27 September in which the company says "served today with a search warrant issued by a Magistrate Judge for the U.S. District Court in the Southern District of Florida.... During the exercise of the warrant the Company fully cooperated. There has been no action taken against the Company’s structured settlement business and the Company anticipates normal operations, across all of its business segments, will resume tomorrow.

“Today’s action comes as a complete surprise. We are not aware of any wrongdoing and will cooperate fully with all relevant authorities to assist them in their investigation,” said Antony Mitchell, chairman and chief executive officer, Imperial Holdings, Inc.

"The Company understands that it and certain of its employees, including its chairman and chief executive officer, and its president and chief operating officer, are under investigation in the District of New Hampshire with respect to its life finance business, " the statement says.

That was a bloody bone to the ravaging dogs of class-action lawyerdom. On 28th September, as the company tried to work out what the FBI wanted and watched its share price collapse, nine law firms announced an "investigation" into the company's affairs. On 29th September, another two firms joined the hounds and since then a further three firms have announced their own "investigations."

The "investigations" are, essentially, speculative ambulance-chasing pitches dumped into the market by law firms hoping to find support for litigation that the law firms hope to sponsor and gain a percentage of. Most will come to nothing.

But they do cost time and money in the target business and often companies settle to get rid of the irritation and distraction.