NEW YORK, June 14, 2005 (PRIMEZONE) -- The law firm of Kirby McInerney & Squire, LLP announces that a class action lawsuit has been commenced in the United States District Court for the Southern District of New York on behalf of purchasers of Doral Financial Corp. ("Doral" or the "Company") (NYSE:DRL) securities, as described more fully below.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact us by phone at (888) 529-4787, or by email at obraun@kmslaw.com for more information. If you are a member of the purported class, you may move the Court to serve as lead plaintiff through counsel of your choice, or you may choose to do nothing and remain an absent class member.
Doral, the largest residential mortgage lender in Puerto Rico, engages in mortgage banking, including thrift operations, institutional securities operations and insurance agency activities. The action charges Doral and certain of its officers with violations of the federal securities laws. The alleged violations stem from the dissemination of false and misleading statements which had the effect of artificially inflating the price of Doral securities.
The Complaint alleges that, throughout the period from September 29, 2003 through April 19, 2005 (the "Class Period"), Doral's purported financial results -- including Doral's assets, net income, and net gain on mortgage loan sales -- had been materially inflated through the materially incorrect valuation of and accounting for Doral's interest-only strip ("IO Strip") portfolio. Investors were first alerted to issues with Doral's IO Strip on January 19, 2005, when Doral announced a $97.5 million write-down of the portfolio's carrying value -- causing Doral securities to decline materially. The decline accelerated in mid-March 2005 when Doral's Form 10-K and Annual Report revealed further negative information about the value and valuation of Doral's IO Strips. Finally, on April 19, 2005, Doral admitted that its valuation methodology for IO Strips throughout 2000-2004 had been incorrect, that it would have to restate its previously-issued financial statements, and that it expected that the restatement would decrease the previously-reported fair value of its IO Strips by $400-$600 million (a 45%-68% devaluation) and would necessitate a $290-$435 million charge against earnings for the required adjustments (i.e., 25%-35% of the net income that Doral reported for that period).
The action charges Doral and certain of its senior officers with violations of sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, as well as section 11 of the Securities Act of 1933. The action is brought on behalf of a proposed class of all investors who purchased Doral's 4.75% preferred stock during the Class Period.
Kirby McInerney & Squire, LLP which represents the plaintiffs, has specialized in complex litigation, including securities class actions, for several decades. The firm has repeatedly demonstrated its expertise in this field, and has been recognized by various courts which have appointed the firm to major positions in consolidated and multi-district litigation. The firm's efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling hundreds of millions of dollars, and the firm's achievements and quality of service have been chronicled in numerous published decisions. More information about the firm, class actions in general, or about the role of the lead plaintiff in a securities class action can be obtained through Kirby McInerney & Squire's website at http://www.kmslaw.com.
If you are a member of the class described above, you may, no later than June 20, 2005, move the Court to serve as lead plaintiff of the class, if you so choose, pursuant to the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), 15 U.S.C. sections 78u-4(a) and 77z-1(a). A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. Under certain circumstances, one or more class members may together serve as lead plaintiff. Your ability to share in any recovery is not, however, affected by the decision whether or not to seek appointment as a lead plaintiff.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.