In Brief: First Merchants Faces Investor Class Action

Shareholders in First Merchants Acceptance Corp. have filed a class action accusing it and its former officials of securities law violations.

The lawsuit names the company; Mitchell C. Kahn, its former chief executive officer; and Thomas R. Eamon, a former vice president and chief information officer.

It was filed on behalf of people who invested in the subprime auto lender between April 17, 1996, and last Friday, two days after First Merchants of Deerfield, Ill., announced it had dismissed the executives after discovering false accounting entries that made it appear as if borrowers were more current on their loans than they actually were.

The company said it would have to restate 1996 earnings and that it would report a first-quarter loss.

First Merchants stock lost 87% of its value during the year covered by the class action.

The plaintiffs are represented by the firms of Wolf Popper, New York, and Miller Faucher Chertow Cafferty & Wexler, Chicago.

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