On June 29, 2007, the Court entered the Memorandum of Decision and Order denying the plaintiff's Motion for Reconsideration of the Court’s earlier decision to grant the defendants’ motion to dismiss the complaint. Another Notice of Appeal was filed by the Lead Plaintiff. The appeal is currently pending in the U.S. Court of Appeals for the Second Circuit.
On September 19, 2006, the Court entered the Memorandum and Opinion granting the Defendants’ motion to dismiss the complaint for failure to state a claim. That day, the Court also entered the Clerk’s Judgment. On October 19, 2006, a notice of appeal was filed.
As disclosed by the Company’s FORM 10-Q For the Quarterly Period Ended June 30, 2006, in 2004, the Company and various executive officers and directors were named in certain putative securities law class action lawsuits brought in the United States District Court, Eastern District of New York, and one class action lawsuit brought in the Supreme Court of the State of New York, Kings County, that was later removed by the defendants to federal court. On August 9, 2005, the court consolidated the actions and appointed a Lead Plaintiff. On October 6, 2005, the Lead Plaintiff filed a consolidated amended complaint on behalf of a putative class of persons and entities, other than defendants, who purchased or otherwise acquired the Company’s securities from June 27, 2003 to July 1, 2004, alleging claims under Sections 11 and 12 of the Securities Act of 1933, Sections 10 and 14 of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated pursuant to Section 10 of the Securities Exchange Act of 1934. Plaintiffs allege, among other things, that the Registration Statement issued in connection with the Company’s merger with Roslyn Bancorp, Inc. and other documents and statements made by executive management were inaccurate and misleading, contained untrue statements of material facts, omitted other facts necessary to make the statements made not misleading, and concealed and failed to adequately disclose material facts, pertaining to, among other things, the Company’s business plans and its exposure to interest rate risk. The defendants moved to dismiss the action on December 19, 2005. That motion remains pending, during which period discovery is stayed pursuant to the Private Securities Litigation Reform Act of 1995.
The original complaint charges New York Community Bancorp, Inc. (NYB), and individual defendants with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The Bank's principal business consists of accepting retail deposits from the general public in the areas surrounding its branch offices and investing those deposits, together with funds generated from operations and borrowings, into multi-family, commercial real estate, and construction loans. 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 defendants manipulated the Company's financial results in order to appear more attractive for potential merger deals; (2) that this was accomplished through leveraged growth funded by short-term funding; (3) the Company's projections about growth and interest rate sensitivity were lacking in any reasonable basis when made; and (4) that the Company's financial results were materially inflated at all relevant times.
On Sunday, May 9, 2004, NYB announced that its Board of Directors had authorized the Company's management team to engage Bear Stearns & Co., Inc., Citigroup Global Markets, Inc., and Sandler O'Neill & Partners, L.P. to assist NYB in undertaking a review of its strategic alternatives, including remaining independent.
The complaint further alleges that on Sunday, May 9, 2004, NYB announced that its Board of Directors had authorized the Company's management team to engage Bear Stearns & Co., Inc., Citigroup Global Markets, Inc., and Sandler O'Neill & Partners, L.P. to assist the Company in undertaking a review of its strategic alternatives, including remaining independent. News of the engagement of three financial firms to 'review strategic alternatives' was the market's first indication that NYB's strategy may not be working as planned. For months, and in numerous interviews, filings, and press releases, defendant Ficalora maintained that NYB would not only do better than its rivals in its sector, but even thrive in an environment of rising interest rates. Following NYB's announcement, in intra-day trading on Monday, May 10, 2004, NYB dropped over $2.53 per share from its previous close, on May 7, 2004, of $24.13 per share, or 10.5%, to close at a low of $21.60 per share. At the close of trading, NYB had fallen $1.33 per share, or 5.5%, to close at $21.80 per share on volume of 9 million shares.