The complaint charges Security Capital and certain of its officers and directors with violations of the Securities Act of 1933. Security Capital, through its subsidiaries, provides financial guaranty insurance, reinsurance, and other credit enhancement products to the public finance and structured finance markets in the United States and internationally.
On or about May 25, 2007, Security Capital filed a Form S-1/A Registration Statement with the Securities and Exchange Commission for the Secondary Offering. On or about June 6, 2007, the Prospectus with respect to the Secondary Offering, which forms part of the Registration Statement, became effective and more than 9.6 million shares of Security Capital common stock were sold to the public at $31.00 per share, thereby raising more than $300 million.
The complaint alleges that the Registration Statement and Prospectus contained untrue statements of material facts because they failed to disclose that: (i) the Company was materially exposed to extremely risky structured financial credit derivatives; and (ii) the Company was materially exposed to residential mortgage-backed securities relating to sub-prime real estate mortgages.
A press release dated July 28, 2008 stated that Judge Deborah A. Batts of the United States District Court for the Southern District of New York has appointed Bernstein Liebhard & Lifshitz, LLP (the "Firm") (www.bernlieb.com) to act as sole lead counsel. The case name is In re Security Capital Assurance Ltd. Securities Litigation, Civ. No. 07-CV-11086 (DAB) (S.D.N.Y.), which is a securities class action against Security Capital Assurance Ltd., its subsidiary XL Insurance, Ltd., several Security Capital officers and directors, and the underwriters of Security Capital's Secondary Public Offering of June 6, 2007. The Firm represents the Employees' Retirement System of the State of Rhode Island ("ERSRI"), which the Court appointed as lead plaintiff. The Firm expects to file a Consolidated Amended Complaint by August 6, 2008.
On August 6, 2008, the lead plaintiff filed a Consolidated Amended Class Action Complaint. The defendants responded by filing various motions to dismiss the Consolidated Amended Class Action Complaint on October 14, 2008. On June 18, 2009, Lead Plaintiff’s Motion To Substitute Lead Counsel For The Class was granted. Grant & Eisenhofer P.A. was appointed Lead Counsel, superseding the appointment of Bernstein Liebhard LLP as Lead Counsel.
On March 31, 2010, a motion to dismiss was granted in part and denied in part. The Court allowed the Plaintiff ninety (90) days to file an Amended Complaint.
On September 23, 2011, the Motions to Dismiss were Granted and the First Amended Consolidated Complaint was Dismissed, with prejudice, for failure to state a claim. Leave to replead was also Denied.