Nevada attorney general accuses the company of document fraud and illegal fee-splitting. Shares are likely to continue to decline.
The shares of Lender Processing Services (LPS +1.87%) came under fire Friday, dropping nearly 20% on unusually high volume after Nevada Attorney General Catherine Cortez Masto filed fraud charges against the company.
Although LPS, a billion-dollar company by market capitalization, has several business lines, the fraud charges relate to its largest (by revenue) default services division. Given the nature of the charges and the mound of evidence AG Masto cites in the complaint, Friday’s fall in share price is likely only the beginning.
In recent years, LPS’s default servicing division has come under fire for two practices central to the attorney general’s charges: document fraud and illegal fee-splitting. Both types of claims go right to the heart of LPS’s business model.