Class Action Lawsuit News

mysan.de - be updated - Schatz & Nobel, P.C. Announces Class Action Lawsuit Against Doral Financial Corporation

mysan.de - be updated - Schatz & Nobel, P.C. Announces Class Action Lawsuit Against Doral Financial Corporation: "HARTFORD, Conn., April 22 /PRNewswire/ -- The law firm of Schatz & Nobel, P.C., which has significant experience representing investors in prosecuting claims of securities fraud, announces that a lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of all persons who purchased the publicly traded securities of Doral Financial Corporation ('Doral' or 'the Company') between January 17, 2001 and April 18, 2005, inclusive (the 'Class Period').

The Complaint alleges that Doral and certain of its officers and directors violated federal securities laws. Specifically, defendants orchestrated a massive accounting fraud through which they improperly valued Doral’s Interest Only Strips ('IOs') and misled investors as to the Company’s vulnerability to interest rate increases. Throughout the Class Period, defendants issued highly positive statements in an effort to create the impression that earnings were increasing and that the value of Doral’s mortgage portfolios was robust. In reality, Doral employed a static measure, instead of a forward curve measure, to calculate the value of its London Bank Offered Rate ('LIBOR') sensitive IOs. Doral now admits that this practice resulted in false and misleading results, which Doral now intends to restate. According to its April 18, 2005 press release, the Company’s annual and interim financial reports for 2000-2004 are materially false and misleading requiring restatement because of the Company’s improper accounting treatment of the IOs. During the Class period, defendants sold 579,750 shares for personal proceeds of $20.5 million and completed numerous necessary debt offerings. Doral has also announced that it is not only restating five years of financial statements, but its accounting practices are the subject of an informal SEC investigation." (Full story at link)

posted by Monkeyman @ 8:56 AM