The PMI Group, Inc. ("PMI" or the Company), through its subsidiaries, provides credit enhancement products designed to promote homeownership and facilitate mortgage transactions in the capital markets in the United States, Australia, New Zealand and the European Union.
According to a press release dated March 12, 2003, the Complaint charges PMI and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The Complaint alleges that during the Class Period, Defendants issued materially false and misleading statements regarding the Company’s business and financial results. As a result of Defendants’ false statements, PMI stock traded at artificially inflated prices during the Class Period, reaching its Class Period high of $50.21 per share in February 2007. Then, on March 3, 2008, after the market closed, PMI announced its preliminary fourth quarter 2007 financial results and that it would be delayed in filing its Form 10-K for year-end 2007 because it was awaiting financial information from an equity investee, FGIC Corporation, that was necessary for the Company to complete its financial statements. On this news, PMI’s stock collapsed to $6.43 per share on March 4, 2008, a one-day decline of 5% and an 87% decline from its Class Period high in February 2007.
According to the Complaint, the true facts, which were known by the Defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company’s investment in FGIC was materially impaired as FGIC’s bond insurance arm, Financial Guaranty, had significant exposure to defaults on bonds it insured due to the plunge in value of mortgage debt; (b) the Company was materially overstating its financial results by failing to properly value its investment in FGIC and by failing to write down that investment in a timely fashion in violation of Generally Accepted Accounting Principles (“GAAP”); (c) the Company was not adequately accounting for its loss reserves in violation of GAAP, causing its financial results to be materially misstated; (d) the Company failed to engage in proper underwriting practices for its book of business related to insurance written in 2005 through most of 2007; (e) the Company had far greater exposure to anticipated losses and defaults related to its book of business related to insurance written in 2005 through most of 2007 than it had previously disclosed; (f) given the deterioration and the increased volatility in the subprime market, the Company would be forced to tighten its standards and stop writing insurance policies to certain categories of borrowers which would have a direct material negative impact on its book of business going forward; and (g) given the increased volatility in the subprime market, the Company had no reasonable basis to make projections about its incurred losses or about its new insurance written.
On June 20, 2008, an order removing the case from ADR was entered and signed by Judge Illston. At the same time, an order granting the motion to appoint lead Plaintiff and its selection of lead Counsel was also entered. Lastly, two orders on the continuation of motion to December 12, 2008 and to continue case were entered on August 13, 2008 and August 14, 2008, respectively.
On May 12, 2008, a motion to appoint lead Plaintiff and lead Counsel was filed.
On July 24, 2009, an amended Complaint for violation of the federal securities laws was filed with the court.
On August 30, 2010, a Stipulation of Settlement between the parties to fully, finally, and forever resolve, discharge, and settle the claims associated with this case was submitted to the Court.
On December 16, 2010, on the application of lead Counsel and lead Plaintiff for an award of attorneys' fees and expenses was filed with the Court. On the same day, an Order Approving Plan of Allocation of Settlement Proceeds and a Final Judgment and Order of Dismissal with Prejudice were also filed with the Court.
