Comerica Incorporated (CMA) Failed to Disclose Violations in its Operations of the Treasury’s Direct Express Program
A shareholder filed a class action on behalf of persons and entities that purchased or otherwise acquired Comerica Incorporated (NYSE: CMA) securities between February 9, 2021 and May 29, 2023. Comerica is a financial services company.
According to the complaint, during the class period, defendants failed to disclose that: (1) Comerica failed to provide meaningful oversight over the vendors to whom it contracted out day-to-day operations of the Direct Express program, a system through which it is contracted to provide federal benefits on debit cards to millions of Americans without bank accounts; (2) as a result of violations in the day-to-day operations of Direct Express, including handling fraud disputes and allowing sensitive data to be handled out of a vendor’s office in Pakistan, Comerica was not in compliance with the Federal Contract, and knew it was not in compliance; and (3) Comerica knew and failed to disclose that it was in potential violation of Regulation E due to inadequate fraud prevention in the Direct Express program and responses to instances of fraud.
On May 29, 2023, American Banker released an article entitled “Comerica in ‘serious violation’ of Treasury’s Direct Express program.” The article discussed significant issues with i2c and Conduent Inc., two vendors to whom Comerica contracts out the day-to day operations of Direct Express, a federal government program which deposits “roughly $3 billion a month electronically on prepaid cards to millions federal government beneficiaries who do not have a bank account.” On this news, the price of Comerica stock declined by $1.40 per share, or 3.59%, to close at $37.59 on May 30, 2023. The next day, the price of Comerica stock declined another $1.49, or 3.96%, to close at $36.10 on May 31, 2023.
What Now: Similarly situated shareholders may be eligible to participate in the class action against Comerica Incorporated. Shareholders who want to act as lead plaintiff for the class must file their motion for lead plaintiff by October 20, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.