Class Action Lawsuit News

PRESS RELEASE Class Action Lawsuit Filed Against Doral Financial Corp.

PRESS RELEASE Class Action Lawsuit Filed Against Doral Financial Corp.: "NEW YORK, NY -- (MARKET WIRE) -- 05/05/2005 -- Abraham Fruchter & Twersky LLP today announced that a class action has been commenced in the United States District Court for the Southern District of New York on behalf of purchasers of Doral Financial Corp. ('Doral') (NYSE: DRL) publicly traded securities during the period between October 10, 2002 and April 19, 2005 (the 'Class Period').

The complaint charges Doral and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Doral is a diversified financial services company engaged in mortgage banking, commercial banking, institutional broker-dealer activities and insurance agency activities.

The complaint alleges that during the Class Period, defendants made materially false and misleading statements regarding the Company's business and prospects. On January 19, 2005, the company reported fourth quarter earnings and for the first time warned of potential trouble with its hedging strategy against interest rate changes through its use of a derivative portfolio of interest-only strips ('IO Strips'). Doral was forced to record a $97.5 million pretax impairment charge on its derivative portfolio of IO Strips. On March 15, 2005, Doral filed its Annual Report on Form 10-K with the Securities and Exchange Commission ('SEC'). In its 2004 Annual Report the Company disclosed for the first time its use of overly aggressive assumptions in valuing its derivatives portfolio of IO Strips. In a matter of days Doral stock plummeted from $38.29 per share to $21.50 per share in extremely heavy volume of more than ten times the daily average." (Full article at link)

posted by Monkeyman @ 12:31 AM