Lender and debt collector Credit Corp Group Limited (ASX: CCP) has entered a trading halt this morning following the publication of an ‘anonymous report’ overnight. Credit Corp requested a trading halt while it prepares a response to the report.
It appears that the report, by an outfit called ‘Checkmate Research’, is reportedly calling out Credit Corp for possibly concerning behaviour, such as using a legal loophole to avoid having its loans classified as payday loans.
The Australian Financial Review reported on the trading halt this morning and stated that the Checkmate report accused Credit Corp of being a “wolf in sheep’s clothing” and said that Checkmate also accused Credit Corp of “earnings management”, which is a phrase that usually suggests a company has allegedly adjusted its accounting to make its profit numbers less lumpy from year to year.
The report apparently calls for Westpac Banking Corp (ASX: WBC) to stop funding Credit Corp, in the same way that Westpac stopped funding payday lenders such as Money3 Corporation Limited (ASX: MNY) and Cash Converters International Ltd (ASX: CCV) in years past.
It is too early to make any judgement on this report before Credit Corp releases its response – which may take several days, since the company requested that the trading halt be allowed to continue until 25 June, or until the news is released.
It seems that Credit Corp may have rightly taken a cautious approach to the release of this report, following the disastrous collapse of Blue Sky Alternative Investments Ltd (ASX: BLA) after a short report was published on that company several months ago. We will have full coverage of the Credit Corp story as the company responds.
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Motley Fool contributor Sean O'Neill has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.