According to the law firm press release, Walter Investment is a loan servicer and business solutions provider focused on generating recurring, fee-based revenues from an "asset-light" platform. The Company specializes in offering creative, structured solutions to owners of less-than-prime, non-conforming and other credit-challenged mortgage assets.
The Complaint alleges that throughout the Class Period,Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company lacked adequate internal controls over financial accounting; (2) the Company's internal controls were not effective; (3) the Company's financial statements contained false and misleading statements; (4) the Company had failed to disclose material weaknesses in the internal controls of its recent acquisition Reverse Mortgage Solutions, Inc. ("RMS"); (5) the Company had overstated the value of RMS; and (6) as a result of the foregoing, the Company's statements were materially false and misleading at all relevant times.
On March 18, 2013, the Company shocked investors by disclosing that, based on an evaluation by the Company's Board of Directors and management, "our management, including our Chief Executive Officer and our Chief Financial Officer, has identified a material weakness in our internal control over financial reporting. As a result of this material weakness, management has concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our internal control over financial reporting was not effective." On this news the Company's shares fell $8.61 per share or over 20% percent to close at $32.98 per share on March 19, 2013.
On June 6, 2013, the Company reported that, [s] "Subsequent to the completion of the RMS Acquisition, the Company discovered a failure to record certain estimated liabilities to investors relating to servicing errors by RMS." The Company concluded after preliminary review that RMS historical financial statements, and the related reports of RMS historical independent registered public accounting firm, "should no longer be relied upon."