LOS ANGELES, June 1, 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 Doral Financial Corporation ("Doral" or the "Company") (NYSE:DRL), between October 10, 2002 and April 19, 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 Doral and certain of the Company's executive officers with violations of federal securities laws. Plaintiff claims defendants' omissions and material misrepresentations during the Class Period artificially inflated Doral's stock price, inflicting damages on investors. Doral is a diversified financial services company engaged in mortgage banking, commercial banking, institutional broker-dealer activities and insurance agency activities. The Complaint alleges that during the Class Period defendants failed to disclose and/or misrepresented material adverse facts, including that: (a) the Company was using overly aggressive and unrealistic assumptions to value its derivative portfolio of interest-only strips ("IO Strips") used to hedge its mortgage portfolio against interest rate fluctuations; (b) the Company was using fraudulent accounting practices and materially overstated its net income, net gain on mortgage loan sales and net capital; and (c) the Company was using ineffective risk management and hedging strategies against the increasing risk of rising interest rates.
On January 19, 2005, the Company for the first time warned of potential trouble with its hedging strategy against interest rate changes through its use of a derivative portfolio of IO Strips. On March 15, 2005, Doral filed its Annual Report with the SEC in which the Company disclosed for the first time its use of overly aggressive assumptions in valuing its IO Strips portfolio.
On March 16, 2005, a Wachovia Capital Markets analyst downgraded Doral to "underperform" and cut his fiscal year earnings-per-share estimate after reviewing the Company's annual report. The next day, a Merrill Lynch analyst downgraded Doral stock and cut his fiscal year earnings-per-share estimates. In response to the Company's disclosure, Standard & Poor's lowered its outlook for Doral's long-term debt from stable to negative, expressing "concern over the sustainability of the Company's business model." In a matter of days Doral stock plummeted from $38.29 per share to $21.50 per share in extremely heavy 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 20, 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.