Case Page

 

Case Status:    DISMISSED    
On or around 02/12/2009 (Other)

Filing Date: May 20, 2008

According to the docket, a class action was filed on May 20, 2008 on behalf of all current and former National City Corporation ("National City" or the "Company") employees who acquired National City common stock pursuant and/or traceable to a registration statement filed with the Securities and Exchange Commission ("SEC") on December 1, 2006.

The complaint states that the December 1, 2006 Registration Statement was filed with the SEC so that National City could offer 2.4 million shares of stock to employees of Harbor Federal Savings Bank ("Harbor Bank") under the Harbor Bank Employee Stock Ownership Plan and the Harbor Bank Stock Incentive Plan (collectively, the "Harbor Bank Plans"). National City acquired Harbor Bank on December 1, 2006. The December 1, 2006 Registration Statement contained misleading statements and omissions that violated the Securities Act of 1933 ("1933 Act").

Plaintiffs’ allegations include that the Registration Statement was materially false and misleading in that it included misleading and inaccurate statements and/or failed to disclose: (i) the fact that the Company's portfolio of collateralized debt obligations ("CDOs"), many of which were backed by subprime mortgage loans, was dangerously overexposed to risky and impaired CDOs; (ii) the fact that the Company had failed to properly account for its highly leveraged loans and mortgage securities; (iii) the extent to which National City was exposed to securities backed by adjustable rate mortgages ("ARMS"), which would be toxic to the Company once housing prices stopped increasing at a rapid pace; (iv) the fact that the Company was using dangerously high levels of leverage to prop up its financial results, thereby exposing the Company to a severe liquidity crisis; (v) the fact that the Company's liquidity position had deteriorated to dangerously low levels.

The complaint further alleges the Registration Statement was also materially misleading and inaccurate in that it included misleading and inaccurate statements and/or failed to disclose material information about National City's loan origination and lending practices. In particular, the Registration Statement made materially misleading statements and/or failed to disclose: (i) that the Defendants had disregarded publicly stated underwriting and loan-origination practices to artificially inflate reported income, earnings and loan volume; (ii) that the Company had made a substantial amount of loans without requiring documentation confirming the credit-worthiness of borrowers; (iii) that the Company lacked the requisite internal controls to determine appropriate allowance for loan losses; (iv) that the Company understated reserves and allowances for loan losses which did not properly reflect the risk facing the Company for the purpose of artificially inflating the Company's reported income and earnings; (v) that the Company improperly mischaracterized high-risk, low documentation loans as prime loans as opposed to sub-prime loans; (vi) that the Company engaged in predatory lending practices; (vii) that the Company's purported financial success was the result of aggressively and improperly originating risky loans, without regard to its stated underwriting and origination policies, and without taking adequate reserves to reflect the risks associated with such loans; and (viii) that the Company did not properly value and failed to disclose the ineffectiveness of its hedging with respect to loans held for sale, MSRs and retained interests.

Defendant National City is a financial holding company that provides commercial and retail banking, mortgage financing and servicing, consumer finance, and asset management services in the United States. The Company is headquartered in Cleveland, Ohio.

On December 2, 2008, by Judicial Panel on Multidistrict Litigation Transfer Order to MDL 2003 docket for coordinated or consolidated pretrial proceedings.

According to the Order dated February 12, 2009 and signed by Judge Solomon Oliver, Jr., for the reasons stated above, the court grants Plaintiffs’ Motion to Remand (ECF No. 9.) Based on the court’s determination that it lacks subject matter jurisdiction in the instant case, the court denies as moot the following Motions: (1) Defendant Ernst & Young, LLP’s Motion to Dismiss (ECF No. 14); (2) Defendant National City’s Motion to Dismiss (ECF No. 17); and (3) National City’s Request for Judicial Notice in Support of its Motion to Dismiss the Complaint (ECF No. 18.)

COMPANY INFORMATION:

Sector: Financial
Industry: Regional Banks
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: NCC
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: N.D. Ohio
DOCKET #: 08-CV-01247
JUDGE: Hon. Patricia A. Gaughan
DATE FILED: 05/20/2008
CLASS PERIOD START: 12/01/2006
CLASS PERIOD END: 01/02/2008
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Scott & Scott LLC (Connecticut)
    P.O. Box 192, 108 Norwich Avenue, Scott & Scott LLC (Connecticut), CT 06415
    860.537.5537 860.537.4432 · scottlaw@scott-scott.com
No Document Title Filing Date
COURT: N.D. Ohio
DOCKET #: 08-NC-70012
JUDGE: Hon. Patricia A. Gaughan
DATE FILED: 12/02/2008
CLASS PERIOD START: 12/01/2006
CLASS PERIOD END: 01/02/2008
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Scott & Scott LLC (Connecticut)
    P.O. Box 192, 108 Norwich Avenue, Scott & Scott LLC (Connecticut), CT 06415
    860.537.5537 860.537.4432 · scottlaw@scott-scott.com
No Document Title Filing Date