Case Page

 

Case Status:    DISMISSED    
On or around 08/27/2009 (Court's order of dismissal)

Filing Date: May 16, 2008

The original complaint charges Downey and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Downey is a savings and loan holding company. Specificcally, 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, Downey’s stock traded at artificially inflated prices during the Class Period, reaching a high of $74.85 per share in June 2007.

On October 10, 2007, Downey announced that it expected to incur an operating loss for the 2007 third quarter due to the continued weakening in the housing market. Then, before the market opened on March 17, 2008, Downey released its monthly selected financial results for the 13 months ended February 29, 2008, which showed a significant increase in non-performing assets to almost 11% of total assets, up from 1.2% in May 2007. Downey had to restructure debt for many borrowers to avoid having their loans fail. On this news, Downey’s stock dropped to close at $18.82 per share on March 17, 2008, a decline from $19.14 per share on March 14, 2008, and a decline of 68% from $59 per share on October 9, 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) defendants’ portfolio of Option ARMs contained millions of dollars worth of impaired and risky securities, many of which were backed by subprime mortgage loans; (b) prior to the Class Period, Downey had seen Countrywide’s growth and had started to get more aggressive in acquiring loans from brokers such that the loans were extremely risky; (c) defendants failed to properly account for highly leveraged loans such as mortgage securities; (d) Downey had very little real underwriting, which led to large numbers of bad loans that would cause huge numbers of defaults; and (e) Downey had not adequately reserved for Option ARM loans, the terms of which provided that during the initial term of the loan borrowers could pay only as much as they desired with any underpayment being added to the loan balance.

On November 12, 2008, the Lead Plaintiff filed a Consolidated Amended Complaint against the Defendants.

On July 22, 2008, a notice of motion and motion to consolidate cases was filed. In the following month, minutes stating the order granting Waterford’s motion to consolidate cases was entered on August 15, 2008. Lastly, a consolidated complaint was filed by lead plaintiff Waterford Township General Employees Retirement System on September 30, 2008.

COMPANY INFORMATION:

Sector: Financial
Industry: S&Ls/Savings Banks
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: DSL
Company Market: New York SE
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: C.D. California
DOCKET #: 08-CV-03261
JUDGE: Hon. John F. Walter
DATE FILED: 05/16/2008
CLASS PERIOD START: 10/16/2006
CLASS PERIOD END: 03/14/2008
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    401 B Street, Suite 1700, Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    206.749.5544 206.749.9978 · info@csgrr.com/
No Document Title Filing Date
COURT: C.D. California
DOCKET #: 08-CV-03261
JUDGE: Hon. John F. Walter
DATE FILED: 09/30/2008
CLASS PERIOD START: 10/16/2006
CLASS PERIOD END: 03/14/2008
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Coughlin Stoia Geller Rudman & Robbins LLP (Los Angeles)
    9601 Wilshire Blvd., Suite 510, Coughlin Stoia Geller Rudman & Robbins LLP (Los Angeles), CA 90210
    310.859.3100 310.278.2148 ·
  2. Coughlin Stoia Geller Rudman & Robbins LLP (San Francisco)
    100 Pine Street, Suite 2600, Coughlin Stoia Geller Rudman & Robbins LLP (San Francisco), CA 94111
    415.288.4545 415.288.4534 ·
No Document Title Filing Date