Firm settles shareholder suit

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Friday, March 22, 2002 | 9:58 a.m.

SAN FRANCISCO -- Credit card issuer Providian Financial Corp. agreed to pay $38 million to settle a class-action lawsuit filed by shareholders that claimed the company inflated its profits by gouging its customers in the late 1990s.

The settlement covers investors who bought Providian's once high-flying stock between Jan. 21-June 4, 1999.

The deal doesn't cover pending shareholder lawsuits filed last year after Providian shocked Wall Street by revealing huge loan losses that threatened to ruin the company.

The $38 million case revolved around allegations of abusive business practices in which customers were charged excessive fees. These fees inflated Providian's profits, attorneys said.