MINNEAPOLIS, May 27, 2008 (PRIME NEWSWIRE) -- Charles H. Johnson & Associates announces that a class action has been commenced in the United States District Court for the Central District of California on behalf of purchasers of Downey Financial Corporation ("Downey" or the "Company") (NYSE:DSL) publicly traded securities during the period October 16, 2006 through March 14, 2008 (the "Class Period").
If you are a member of the proposed Class, you may move the Court to serve as a lead plaintiff for the Class on or before July 15, 2008. You do not need to be a lead plaintiff in order to share in any recovery that may be obtained.
The Complaint alleges that Downey and certain of its officers and directors violated federal securities laws by issuing materially false statements regarding the Company's financial results. Specifically, the Complaint alleges that Defendants concealed the following: 1) Downey's portfolio of Option ARMs contained millions of dollars worth of impaired and risky securities, many of which were backed by subprime mortgage loans; 2) prior to the Class Period, Downey had seen Countrywide's growth and had started to get more aggressive in acquiring loans from brokers such that the loans were extremely risky; 3) defendants failed to properly account for highly leveraged loans; 4) Downey had very little real underwriting, which led to large numbers of bad loans; and 5) Downey had not adequately reserved for Option ARM loans, which provided that during the initial term of the loan borrowers could pay only as much as they desired with any underpayment being added to the loan balance.
On October 10, 2007, Downey announced that it expected to incur an operating loss for the 2007 third quarter due to the continued weakening in the housing market. Then, on March 17, 2008, Downey released its monthly selected financial results for the 13 months ended February 29, 2008, which showed a significant increase in non-performing assets to almost 11% of total assets, up from 1.2% in May 2007. Downey had to restructure debt for many borrowers to avoid having their loans fail. On this news, Downey's stock dropped to close at $18.82 per share on March 17, 2008.
If you purchased Downey Financial Corporation securities during the Class Period, or have any questions concerning this notice or your rights with respect to this matter, please contact:
Neal Eisenbraun, Esq. (cjohnsonlaw@gmail.com)
Charles H. Johnson & Associates
2599 Mississippi Street
New Brighton, MN 55112
(651) 633-5685