According to a press release dated April 21, 2009, the complaint charges MRU and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges, among other things, that the defendants’ public statements failed to disclose, among other things, that: (1) the market for Auction Rate Securities (“ARS”), which the Company issued in its first student loan securitization, was illiquid and existed at the whim of the broker-dealers; (2) the illusion of liquidity created by the broker-dealers allowed the Company to securitize its student loans on favorable terms; (3) that once the true nature of the ARS market became known, the terms of future securitizations by the Company would not be favorable to the Company; and (4) that without the favorable terms available in the ARS market as a result of manipulation by the broker-dealers, the Company would not have sufficient capital to originate loans, making the Company’s business model untenable.
On July 7, 2008, the Company revealed the unfavorable terms of its second securitization, causing the price of its securities to drop to $2.27 per share – a one day decline of $0.23 per share, or 9.2%. Then, on August 18, 2008, Moody’s Investors Service placed the ARSs issued by MRU on review for downgrade, driving the price of MRU shares even further, to $1.05 per share. After the market closed on September 5, 2008, the Company ceased originating student loans, which caused MRU’s stock price to fall even further, closing on September 6, 2008 at $0.71. Finally, on February 9, 2009, MRU announced that it had filed a voluntary petition for bankruptcy. The Company’s shares have been delisted from the NASDAQ stock exchange, and currently trade at less than $.01 per share.
On October 5, 2009, Judge Richard M. Berman signed the Order consolidating several related actions under the caption "In re MRU Holdings Securities Litigation" and under the docket number 09 Civ. 3807 (RMB). The Gianoukas Group is appointed Lead Plaintiff, and The Rosen Law Finn is appointed Lead Counsel. On January 4, 2010, the lead plaintiffs filed an Amended Complaint. The defendants responded by filing a motion to dismiss the Amended Complaint.
Before any ruling on the pending motion to dismiss, on August 20, 2010, a Consolidated Second Amended Class Action Complaint was filed. The defendants responded by filing a joint motion to dismiss on September 24, 2010. According to the Decision and Order signed by Judge Richard M. Berman on February 17, 2011, the Defendants' joint motion to dismiss the Complaint with prejudice is granted in its entirety. The Court entered the Clerk's Judgment on February 18, 2011, and the case is now closed.