LOS ANGELES, April 8, 2005 (PRIMEZONE) -- Notice is hereby given by Glancy Binkow & Goldberg LLP that a Class Action lawsuit was filed in the United States District Court for the Southern District of New York on behalf of a class (the "Class") consisting of all persons or entities who purchased or otherwise acquired securities of MBIA Inc. ("MBIA" or the "Company") (NYSE:MBI) between August 5, 2003 and March 30, 2005, inclusive (the "Class Period").
A copy of the Complaint is available from the court or from Glancy Binkow & Goldberg LLP. Please contact us by phone to discuss this action or obtain a copy of the Complaint at (310) 201-9150 or Toll Free at (888) 773-9224, by email at info@glancylaw.com, or visit our website at www.glancylaw.com.
The Complaint charges MBIA and certain of the Company's executive officers with violations of federal securities laws. MBIA provides financial guarantee insurance, investment management services, and municipal and other services to public finance, and structured finance clients on a global basis. The Complaint alleges that during the Class Period defendants failed to disclose and/or misrepresented that MBIA: (a) was overleveraged, substantially under-reserved against possible credit defaults, and overly exposed to guaranteeing risky structured financings; (b) accelerated recognition of current income by classifying many upfront guarantee fees as advisory fees taken at closing, rather than accounted for over the life of the bonds insured; (c) improperly booked a $70 million payment from Converium Re (formerly Zurich Reinsurance North America) in 1998; (d) as a result, MBIA financial statements were materially overstated by $60 million; and (e) artificially inflated premium income and portfolio credit quality by insuring bonds in the secondary market that were attracting prices lower than their stale credit ratings would dictate; (f) MBIA's low loss ratios resulted from the Company deferring recognition of problems rather than providing layers of excess collateral or other underwriting protection; (g) MBIA set forth an illegal scheme to cover the loss from the failed Allegheny Health, Education and Research Foundation ("Aherf") bond issuance; (h) MBIA was dumping performing but troubled policies from its existing portfolio onto Channel Reinsurance Ltd. -- a Bermuda reinsurer of which MBIA owns a 17.4% interest -- in order to bolster its financial results; and (i) MBIA lacked adequate internal controls and was, therefore, unable to ascertain the Company's true financial condition.
On November 18, 2004, an MBIA press release announced that it received identical document subpoenas from the SEC and the New York Attorney General's office (NYAG) requesting information concerning non-traditional or loss-mitigation insurance products developed, offered or sold by MBIA to third parties dating from January 1, 1998.
On March 8, 2005, MBIA announced a restatement of its financial statements for 1998 and subsequent years to correct the accounting treatment for two reinsurance agreements that MBIA entered into in 1998 with Converium Re. Then on March 9, 2005, MBIA announced that it had received a subpoena from the U.S. Attorney's Office for the Southern District of New York seeking information related to the reinsurance agreements it entered into in connection with the loss it incurred in 1998 on bonds insured by MBIA Insurance Corp. -- MBIA's main operating unit -- that were issued by AHERF. These matters are currently under investigation by the SEC and the NYAG.
Finally, on March 30, 2005, MBIA announced that it had received additional requests from the NYAG and the SEC, supplementing the subpoenas served on the Company in late-2004. The requests sought documents relating to the Company's accounting treatment of advisory fees, its methodology for determining loss reserves and case reserves, instances of purchase of credit default protection on itself, and documents relating to Channel Reinsurance Ltd. This new shocked the market, and shares of MBIA fell $4.36 per share, or 7.7 percent, to close at $52.28 per share on unusually heavy trading volume.
Plaintiff seeks to recover damages on behalf of Class members and is represented by Glancy Binkow & Goldberg LLP, a law firm with significant experience in prosecuting class actions, and substantial expertise in actions involving corporate fraud.
If you are a member of the Class described above, you may move the Court, not later than June 6, 2005, to serve as lead plaintiff, however, you must meet certain legal requirements. If you wish to discuss this action or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact Michael Goldberg, Esquire, of Glancy Binkow & Goldberg LLP, 1801 Avenue of the Stars, Suite 311, Los Angeles, California 90067, by telephone at (310) 201-9150 or Toll Free at (888) 773-9224 or by e-mail to info@glancylaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca