The original class action lawsuit was filed against the Company and certain of its officers and directors, alleging violations under Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. ss.78j(b) and the rules and regulations promulgated thereunder by the SEC, including Rule 10b-5, 17 C.F.R. ss.240.10b-5 (the "Class").
Specifically, the Complaint alleges that throughout the Class Period, defendants issued numerous, positive financial statements, annual and quarterly financial reports filed with the SEC, press releases, and other public statements that described the Company's financial performance. The Complaint further alleges that these public statements were materially false and misleading because they misrepresented and failed to disclose the following adverse facts, among others: (a) that the Company was facing increasing margin calls; (b) that its available leverage had significantly diminished; (c ) that its financial situation had deteriorated to the point where it must sell certain assets; and, (d) that as a result of the foregoing the Company reported overstated financial results.
As a result of defendants' false statements, TMI's stock traded at artificially inflated price during the Class Period, reaching a high of $30.64 per share on June 17, 2005.
The complaint further alleges that on August 20, 2007, before the market opened, the Company published a press release over the Business Wire detailing that it was forced to sell $20.5 billion of its top-rated mortgage backed securities to boost its liquidity. This announcement was made in the wake of the August 14 announcement that the Company had to stop funding loans due to the credit crunch. The Company had been unable to repay nearly $8.4 billion of commercial paper outstanding as of June 30, 2007 because buyers of the paper demanded terms and covenants that the Company was either unwilling or unable to satisfy.
As a result of these disclosures, the Company's price per share fell $1.73 by midday trading, a 9% decline over its previous close on extremely heavy volume.
Similar, purported class action complaints have been filed in the U.S. District Court for the Southern District of New York with class period between April 19, 2007 to August 14, 2007.
On February 8, 2008, by Judge James O. Browning issued the Order granting the motion to consolidate several related class actions and approved the motion to appoint lead plaintiffs and co-lead counsel. On May 5, 2008, the lead plaintiffs filed a Consolidated Class Action Complaint, which added additional claims in violation of the Securities Act of 1933 and added a number of underwriters as named defendants. In September 2008, the defendants filed several motions to dismiss the Consolidated Class Action Complaint. On May 5, 2009, Thornburg Mortgage, Inc. filed a Suggestion of Bankruptcy. District Judge James O. Browning has requested the parties explain the effect of the filing of the Suggestion of Filing Bankruptcy will have on the case.
On January 27, 2010, Judge James O. Browning signed the Memorandum Opinion and Order granting in part, denying in part, and reserving ruling in part the Motion to Dismiss Consolidated Amended Complaint by Defendants Thornburg Mortgage, Inc., and the individual defendants. Judge Browning also granted the Underwriter Defendants’ Motion to Dismiss. On February 8, 2010, the underwriter defendants filed a motion for entry of judgment, which was denied on June 24, 2010.
According to the Order by District Judge James O. Browning entered on April 1, 2011, it is ordered that the Plaintiffs’ Omnibus Motion for (i) Leave to Amend the Consolidated Class Action Complaint and (ii) for Reconsideration of the Court’s January 27, 2010 Memorandum Opinions and Orders Granting in Part and Denying in Part Defendant’s Motions to Dismiss the Consolidated Amended Complaint, filed July 9, 2010 (Doc. 309), is hereby granted in part and denied in part.
On June 14, 2011, the plaintiffs filed a Consolidated Amended Class Action Complaint. On June 23, 2011, the defendants filed a second motion for entry of judgment. On June 28, 2011, a stipulation was filed. According to the Stipulation filed on June 28, 2011, certain defendants are dismissed and need not answer or respond to the second amended complaint. On July 25, 2011, Judge James O. Browning granted the motion for entry of judgment. The action is dismissed as to the Underwriter Defendants.
On August 24, 2011, a Notice of Appeal was filed as to the Order dismissing the action against the Underwriter Defendants.
On March 2, 2012, Notice was filed dismissing Defendant from the litigation with prejudice.
On April 23, 2012, the Court issued an Order Preliminarily Approving Settlement And Providing For Notice. On July 24, 2012, the Court issued a Memorandum Opinion further explaining its April 23 Order.
On November 26, 2012, the Court issued a Memorandum Opinion and Order granting in part (i) the Plaintiffs’ Motion for Final approval of Proposed Settlement, Plan of Allocation and Certification of Class for Settlement Purposes; and (ii) Co-Lead Counsel’s Motion for an Award of Attorneys’ Fees and Expenses and
Memorandum of Law in Support of Approval of Co-Lead Counsel’s Motion for an Award of Attorneys’ Fees and Expenses.
On December 13, 2012, the Court issued an Order awarding attorneys' fees and expenses. On the same date, the Court also issued an Order and Final Judgment.