According to a press release dated September 23, 2011, the Defendants violated federal securities laws in connection with allegedly false and misleading statements.
The complaint alleges that during the Class Period, Defendants misled investors by failing to disclose that the Company potentially owes a third party company over $10 billion. Specifically, Defendants’ statements during the Class Period were materially false and misleading for failing to disclose that between 2005 and 2007, the Company and two companies it acquired and their subsidiaries sold the third party over $28 billion in residential mortgage-backed securities, and that as a result of these sales, the third party company suffered losses in excess of $10 billion and the Company was potentially subject to suit for those losses. Throughout the Class Period, Defendants repeatedly informed investors about the claims of other entities for their RMBS losses but not about the massive losses suffered by the third party.
Subsequently, on August 8, 2011, the third party filed suit against the Defendant company in New York state court seeking to recover the losses it had suffered from the RMBS that the Company, and the companies it acquired, had sold it between 2005 and 2007. As a result, the price of the Company’s common stock dropped from a closing price of $8.17 per share on August 5, 2011 to $6.51 per share on August 8, 2011, a decline of more than 20% in one trading day.
On June 18, 2012, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel.
On July 20, 2012, the plaintiffs filed their amended complaint. On September 26, 2012, the plaintiffs filed a notice of election to file a second amended complaint, which they filed on October 26, 2012.
On November 1, 2013, the Court issued an Order granting defendants' motion to dismiss. The Clerk was directed to enter judgment dismissing this action and closing the case. On November 20th, the plaintiffs filed a Notice appealing the above Order.