Providian’s Shares Dive

Providian Financial Corp. said Monday that Connecticut’s chief prosecutor is investigating the way the company does business, adding to the San Francisco-based credit card firm’s legal problems and sending its stock plummeting 23%.

Providian shares tumbled $26.25 to close at $89.25 on the New York Stock Exchange. The decline shaved about $3.75 billion from Providian’s market value and was the biggest percentage drop among the S&P; 500 stocks.

Providian, the biggest U.S. issuer of cards to consumers with tarnished credit, said Connecticut Atty. Gen. Richard Blumenthal had requested documents, including those related to billing procedures.

The firm already faces a San Francisco district attorney’s investigation and consumer lawsuits alleging that it erroneously charged thousands of customers late fees and misled them into buying such things as credit insurance.

The Connecticut investigation of Providian involves similar issues.

“There’s nothing that we haven’t seen before,” said Providian spokeswoman Laurie Cole.

Providian has been talking with San Francisco prosecutors about settling consumer complaints that the district attorney’s office there began investigating last May.

“Blumenthal has been very successful in litigations; he’s one of the lead guys in the Microsoft case,” said E. Reilly Tierney, an analyst at Fox-Pitt Kelton Inc. “It raises the specter of other jurisdictions getting on the bandwagon.”

Providian shares fell about 40% in the month after the San Francisco probe started. The stock recovered most of that in October as investors cheered its 83% third-quarter profit growth.