NEW YORK, April 25, 2005 (PRIMEZONE) -- The law firm of Goodkind Labaton Rudoff & Sucharow LLP has filed a class action lawsuit in the United States District Court for the Southern District of New York, on behalf of persons who purchased or otherwise acquired publicly traded securities of Doral Financial Corp. ("Doral" or the "Company") (NYSE:DRL) between January 17, 2001 and April 18, 2005, inclusive, (the "Class Period"). The lawsuit was filed against Doral, PricewaterhouseCoopers, LLP, Salomon Levis, Richard F. Bonini and Richardo Melendez ("Defendants").
If you are a member of this class you can view a copy of the complaint and join this class action online at http://www.glrs.com/get/?case=Doral
The complaint alleges that Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Specifically, the complaint alleges that the Defendants failed to disclose to the investing public that the Company was improperly overvaluing its floating rate interest only ("IO") Strips, an important part of its mortgage portfolio, and thereby substantially inflating its financial results during the Class Period. As a result, during the Class Period the Company's net income and net gain on mortgage loan sales were materially overstated, the Company's return on equity and capital were materially overstated, and the Company's reported net capital was materially overstated. Defendants also failed to disclose to investors that the Company's risk management, hedging strategies, and internal controls were deficient and would not protect the value of Doral's portfolio in a rising-rate environment, despite repeated reassurances to the contrary.
On April 19, 2005, Doral announced that it was restating its financial results for 2000 through 2004. The restatements were made to correct the accounting treatment for the value of its IO Strip portfolio. The Company said the restatement will result in a decrease in the fair value of the securities by $400 million to $600 million. It said it will have to take a $290 million to $435 million charge for the required adjustments. In a press release, the Company also stated that "management concluded that the previously filed interim and audited financial statements for the periods from January 1, 2000, through December 31, 2004, could be materially affected and, therefore, should no longer be relied on and that the financial statements for some or all of the periods included therein should be restated." Since January 3, 2005, the price of Doral's common stock has dropped from $48.50 per share to below $16 per share.
Plaintiffs are represented by the law firm of Goodkind Labaton Rudoff & Sucharow LLP. Goodkind Labaton is one of the country's premier national law firms that represent individual and institutional investors in class action, complex securities and corporate governance litigation. The firm has been a champion of investor rights for over 40 years and has been recognized for its reputation for excellence by the courts. Goodkind Labaton was recently ranked fourth in total recoveries in 2003 among the top-50 plaintiffs' law firms by Institutional Shareholder Services (ISS), the world's leading provider of proxy and corporate governance services. Notably, Goodkind Labaton recovered over half a billion dollars for its clients last year.
If you bought Doral securities between January 17, 2001 and April 18, 2005, inclusive, you may qualify to serve as Lead Plaintiff. Lead Plaintiff papers must be filed with the court no later than June 20, 2005. If you would like to consider serving as lead plaintiff or have any questions about the lawsuit, please contact one of our representatives at 800-321-0476 or visit us online at http://www.glrs.com/get/?case=Doral.