Company: CPSS
Filing Date: 2025-03-12
Form Type: 10-K
Source: 0001683168-25-001548
Chunk: 185

Company: CONSUMER PORTFOLIO SERVICES, INC.
Filing Date: 2025-03-12
Form: 10-K
Item: Item 1A
Chunk 185
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 been and will be subject to risk retention requirements, which generally require that sponsors
of asset-backed securities (ABS), such as us, retain not less than five percent of the credit risk of the assets collateralizing the ABS
issuance. The rule also sets forth prohibitions on transferring or hedging the credit risk that the sponsor is required to retain. Similar
but not identical risk retention requirements are applicable after December 2018 to securitization transactions where purchasers of the
ABS have sufficient contacts with the European Union. Because the rules place an upper limit on the degree to which we may use financial
leverage, our securitization structures may require more capital of us, or may release less cash to us, than might be the case in the
absence of such rules.

 24 

If We Experience Unfavorable Litigation Results, Our Results of
Operations May Be Impaired.

We operate in a litigious
society and currently are, and may in the future be, named as defendants in litigation, including individual and class action lawsuits
under consumer credit, consumer protection, theft, privacy, data security, automated dialing equipment, debt collections and other laws.
Many of these cases present novel issues on which there is no clear legal precedent, which increases the difficulty in predicting both
the potential outcomes and costs of defending these cases. We are subject to regulatory examinations, investigations, inquiries, litigation,
and other actions by licensing authorities, state attorneys general, the FTC, the CFPB and other governmental bodies relating to our activities.
The litigation and regulatory actions to which we are or may become subject involve or may involve potential compensatory or punitive
damage claims, fines, sanctions or injunctive relief that, if granted, could require us to pay damages or make other expenditures in amounts
that could have a material adverse effect on our financial position and our results of operations. We have recorded loss contingencies
in our financial statements only for matters on which losses are probable and can be reasonably estimated. Our assessments of these matters
involve significant judgments, and may change from time to time. Actual losses incurred by us in connection with judgments or settlements
of these matters may be more than our associated reserves. Furthermore, defending lawsuits and responding to governmental inquiries or
investigations, regardless of their merit, could be costly and divert management’s attention from the operation of our business.
Unfavorable outcomes in any such current or future proceedings could materially and adversely affect our results of operations, financial