Shareholder Class Action Filed Against Downey Financial Corp. by the Law Firm of Schiffrin Barroway Topaz & Kessler, LLP
RADNOR, Pa., June 2 /PRNewswire/ -- The following statement was issued today by the law firm of Schiffrin Barroway Topaz & Kessler, LLP:
Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Central District of California on behalf of all purchasers of securities of Downey Financial Corp. (NYSE:DSL) ("Downey" or the "Company") from October 16, 2006 through March 14, 2008, inclusive (the "Class Period"). If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin Barroway Topaz & Kessler, LLP (Darren J. Check, Esq. or Richard A. Maniskas, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbtklaw.com.
The Complaint charges Downey and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Downey is the parent company of Downey Savings and Loan Association, F.A., which provides financial services to corporate and individual customers. Downey invests in residential real estate mortgage loans, mortgage-backed securities, investment securities, and sells loans to investors in the secondary markets. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company's option adjustable-rate mortgages ("Option ARMs") portfolio contained significant amounts of securities backed by subprime mortgage loans; (2) that the Company had aggressively engaged in the acquisition of loans that were very high in risk; (3) that the Company's Option ARMs portfolio was materially impaired; (4) that the Company had improperly accounted for mortgage backed securities and other highly leveraged loans; (5) that the Company had inadequate reserves; and (6) that the Company lacked adequate internal and financial controls. On October 10, 2007, the Company shocked investors when it announced that it had been adversely impacted by the housing market and that it expected to incur an operating loss of $23 million for the quarter. The Company stated that it had tightened its lending guidelines, activated a loan modification group to work with borrowers, and provided necessary resources to dispose of homes acquired through foreclosures on a timely basis. Despite the dismal news, the Company stated that it was well positioned to continue funding loans because of its strong capital positions and stable source of funds from its retail branch franchise. Upon the release of this news, the Company's shares declined $6.25 per share, or 10.53 percent, to close on October 10, 2007 at $53.12 per share, on unusually heavy trading volume. Then, on March 17, 2008, the Company reported selected financial results for the 13 months ended February 29, 2008. These results showed a decrease in assets and home loans, as well as that non-performing assets were nearly 11% of total assets, as compared to 1.2% of total assets in May 2007. The Company reported $13.4 billion in assets, as compared to $15.5 billion a year earlier, and home loans of $75.7 million as compared to $127.4 million one month earlier. On this news, the Company's shares declined, closing at $18.82 on March 17, 2008. During the Class Period, shares of the Company's stock had traded as high as $74.85. Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin Barroway Topaz & Kessler which prosecutes class actions in both state and federal courts throughout the country. Schiffrin Barroway Topaz & Kessler is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. For more information about Schiffrin Barroway Topaz & Kessler or to sign up to participate in this action online, please visit http://www.sbtklaw.com/ If you are a member of the class described above, you may, not later than July 15, 2008, move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Any member of the purported class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. CONTACT: Schiffrin Barroway Topaz & Kessler, LLP First Call Analyst:
CONTACT: Darren J. Check, Esq., or Richard A. Maniskas, Esq., both of Web site: http://www.sbtklaw.com/
2008-06-02 18:02:39 0375336 PRNEWSWIRE
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