NEW YORK, May 6, 2005 (PRIMEZONE) -- Murray, Frank & Sailer LLP has filed a Class Action lawsuit 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").
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 news shocked the market, and shares of MBIA fell $4.36 per share, or 7.7 %, to close at $52.28 per share on unusually heavy trading volume.
Murray, Frank & Sailer LLP and its predecessor firms have devoted its practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States.
If you purchased or otherwise acquired MBIA securities on any world exchange between August 5, 2003 and March 30, 200, inclusive, and sustained damages, you may, no later than June 6, 2005, move the Court to serve as lead plaintiff. Shareholders outside the United States may also join the action, regardless of which exchange was used to purchase the securities. To serve as lead plaintiff, however, you must meet certain legal requirements. You can join this class action as lead plaintiff online at http://www.murrayfrank.com/CM/NewCases/NewCases.asp. If you would like to discuss this action, this announcement, or your rights and interests, please contact plaintiff's counsel Eric J. Belfi or Aaron D. Patton of Murray, Frank & Sailer LLP.
More information on this and other class actions can be found on theClass Action Newsline at www.primezone.com/ca