The original 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, Triad stock traded at artificially inflated prices during the Class Period, reaching its Class Period high of $58.45 per share in January 2007. However, beginning in late August 2007 and continuing throughout 2008, Triad began to acknowledge serious issues surrounding its exposure to anticipated losses and defaults related to its book of business for its Alt-A and pay-option adjustable rate mortgage (“ARM”) products written in 2006 and 2007 due to a failure to engage in proper underwriting practices, resulting in a decline in Triad’s stock price. Then, on November 10, 2008, Triad issued its financial results for the third quarter of 2008, reporting a net loss for the quarter ended September 30, 2008 of $160.1 million. On this news, Triad’s stock price dropped $0.11 per share to close at $0.70 per share on November 11, 2008.
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 was not adequately accounting for its loss reserves in violation of Generally Accepted Accounting Principles, causing its financial results to be materially misstated; (b) the Company failed to engage in proper underwriting practices for its book of business related to insurance written in 2006 and 2007, including the insurance related to its Alt-A and pay-option ARM products; (c) the Company had far greater exposure to anticipated losses and defaults related to its book of business related to insurance written in 2006 and 2007, including its Alt-A and pay-option ARM portfolios, than it had previously disclosed; (d) the Company lacked effective internal controls to detect fraud and misrepresentations in the underwriting process; and (e) the Company failed to disclose the true risks associated with its ability to continue to write new business and, given rating downgrades and capital limitations, the Company would be forced to liquidate its Canadian subsidiary and stop writing new insurance policies and transition the business to run-off.
On April 16, 2009, the Court appointed Western Pennsylvania Electrical Employees Pension Fund as Lead Plaintiff and approved the law firms of Coughlin Stoia Gellar Rudman & Robbins LLP as Lead Counsel and McDaniel & Anderson, L.L.P. as Liaison Counsel. On June 22, 2009, the lead plaintiff filed an Amended Class Action Complaint. The defendants responded by filing a motion to dismiss the Amended Complaint on August 21, 2009. The motion is currently pending before the Court.
On March 30, 2012, the lead plaintiff filed a Second Amended Class Action Complaint.
On October 18, 2013, the lead plaintiff filed a Notice voluntarily dismissing the issuer defendant from this case.
On March 30, 2015, the Court issued an Order dismissing this case with prejudice.
On October 5, 2015, the parties entered into a Stipulation of Settlement. The Settlement was preliminarily approved by the Court on December 8. On March 23, 2016, the Court granted final approval of the Settlement and dismissed this case with prejudice.