COLCHESTER, Conn., April 27, 2005 (PRIMEZONE) -- Scott + Scott, LLC announced that it is filing a shareholder class action lawsuit on behalf of purchasers of R & G Financial Corp (NYSE:RGF) securities between January 1, 2003 and April 26, 2005 (this is the present class period; any purchaser of R & G securities in the past five years may contact the firm). Affected investors can reach attorney Neil Rothstein at nrothstein@scott-scott.com , 800/332-2259 or 619/251-0887. Scott + Scott has offices in Connecticut, Ohio and California. The firm (http://www.scott-scott.com) specializes in securities fraud and other complex litigation and represents foundations, individuals, corporations and pension funds worldwide. Shareholders or other interested individuals may contact the firm.
R&G Financial Corporation, a diversified financial services company, announced on April 26, 2005, that R&G Financial was informed by a letter from the U.S. Securities and Exchange Commission (the "Commission") that the Commission was conducting an informal investigation regarding (i) the Company's April 25 2005, announcement that it would restate its financial statements, and (ii) the underlying issues addressed in that press release.
R&G Financial is a diversified financial holding company with operations in Puerto Rico and the United States, providing banking, mortgage banking, investments, consumer finance and insurance through its wholly owned subsidiaries: R-G Premier Bank of Puerto Rico, a Puerto Rico-chartered commercial bank; R-G Crown Bank, its Florida-based savings bank; R&G Mortgage Corp., Puerto Rico's second largest mortgage banker; Mortgage Store of Puerto Rico, Inc., a subsidiary of R&G Mortgage; Continental Capital Corp., R-G Crown's New York and North Carolina-based mortgage banking subsidiary; R-G Investments Corporation, a Puerto Rico broker-dealer; and Home and Property Insurance Corporation, a Puerto Rico insurance agency. As of December 31, 2004, R&G Financial had previously reported consolidated assets of $10.2 billion and consolidated stockholder equity of $855.6 million.
This case is not unlike the one recently brought on behalf of securities purchasers of Doral Financial Corp (NYSE:DRL). In that case, among other things, it is alleged that during the restatement period Doral improperly valued its I/Os strips ("I/Os") using flawed loss assumption, artificially high prepayment assumptions and artificially low discount rates. As a result of such conduct, Doral's stock price traded at artificially inflated levels. It is further alleged that during the restatement period Doral falsely reported its results through its failure to accurately account for its I/O assets, thereby overstating its net income and revenue and understating the Company's net liabilities in violation U.S. GAAP. This enabled certain insiders to reap more than $10 million in insider-trading profits, as well as cash incentive bonuses.
It is further alleged in the Doral action that in the 4Q:04, the impact of the flattening yield curve caught up to Doral. In their quarterly filing, Doral recorded a $97.5 million pretax impairment charge on its I/O strips as the result of an increase in interest rates, specifically a rise in LIBOR -- the London interbank offered rate. Rather than come clean and disclose that they had been misleading investors, it is alleged that Doral attempted to further this false story. In its quarterly filing for 4Q:04, Doral noted its bottom line had been increased, with a $77 million tax benefit stemming from a temporary 50% reduction in Puerto Rico's long-term capital gains rate. This tax benefit applied to transactions between July 1, 2004, and June 30, 2005. Doral claimed that the tax reduction offset a $95 million trading loss it incurred on some of its I/Os that were used to hedge against interest rate fluctuations. Doral stated that the new law prompted it to "accelerate" the time frame for recording an impairment charge on the value of its I/O.
Scott + Scott essentially pleads similar facts against R & G as it did against Doral Financial.
Scott + Scott, a Connecticut-based law firm with offices in Chagrin Falls, Ohio and San Diego, California, is a law firm with a national practice and reputation. The firm is currently litigating major securities, antitrust and employee retirement plan cases throughout the United States and represents pension funds, charities, foundations, individuals and other entities worldwide -- in both class and non-class cases. Scott + Scott dedicates itself to client communication and satisfaction. Please visit our website at http://www.scott-scott.com to learn more about the firm, its practice and other cases. If you wish to discuss this action with an attorney or have any questions concerning this notice, your rights or any matter within our expertise, please contact attorney Neil Rothstein at nrothstein@scott-scott.com or by calling 800/404-7770 (EST) or 800-332-2259 (PST). You can dial direct in California at 619-233-4565. If needd you can reach Mr. Rothstein at (619) 251-0887.
This release is issued in accordance with the applicable U.S. federal law.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.