Creditrust Corporation Securities Litigation

The lawsuit alleges that Settling Defendants misled investors by misrepresenting Creditrust's financial results in its filings with the SEC at the time of Creditrust's initial public offering and in its later filings and public statements. The lawsuit alleges that Creditrust and the Settling Defendants made false claims about its success and alleges that the price of Creditrust's stock was artificially inflated. The lawsuit alleges that investors who paid for the stock at inflated prices were damaged when the truth came out, and the stock price went down. Settling Defendants strongly deny they did anything wrong.

What is the Settlement Fund?

The proposed Settlement calls for Settling Defendants to create a settlement fund in the amount of $7.5 million in cash, plus whatever interest accrues after the fund's creation ("Gross Settlement Fund"). It is estimated that approximately 4.95 million shares of Creditrust common stock were issued to the public during the Class Period. Thus, the $7.5 million recovery represents an average of $1.51 for each publicly available share. This per share recovery is only an estimate and can vary as explained below. (Note that, to the extent that particular Creditrust shares were purchased more than once during the Class Period, this average recovery would be divided among the various purchasers who sold at a loss or held at the end of the Class Period.)

Subject to the Court's approval, a portion of the Gross Settlement Fund also will be used to pay Plaintiffs' attorneys' fees, and reasonable litigation expenses. See Question 16 below. A portion of the Gross Settlement Fund also will be used to pay taxes due on interest earned by the Gross Settlement Fund and notice or claims administration expenses permitted by the Court. After these deductions from the Gross Settlement Fund have been made, the amount remaining (the "Net Settlement Fund") will be distributed to Class Members who submit valid claims.

What can I expect to receive under the proposed Settlement?

Your share of the Net Settlement Fund will depend on: (1) the number of claims filed; (2) the price of the shares you bought; (3) whether you sold your shares during the Class Period, or held your shares past the end of the Class Period; (4) the amount of administrative costs, including the costs of notice and settlement administration; and (5) the amount awarded by the Court for attorneys' fees and expenses.

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