NEW YORK, April 22 – LAWFUEL – The Law News Network — Zwerling, Schachter & Zwerling, LLP (“Zwerling Schachter”) has filed a class action lawsuit in the United States District Court for the Southern District of New York on behalf of all persons
and entities who purchased the common stock of Doral Financial Corp. (“Doral”
or the “Company”) (NYSE: DRL) during the period from January 17, 2001 through
April 18, 2005 (the “Class Period”). The deadline to file a motion seeking to
be appointed lead plaintiff is June 20, 2005.
If you purchased the common stock of Doral during the period from January
17, 2001 through April 18, 2005, you may apply to serve as lead plaintiff.
The lead plaintiff is responsible for overseeing the prosecution of the action
and ensuring that the interests of the class are protected. You may apply to
be appointed lead plaintiff through Zwerling Schachter.
If you wish to discuss this action or have any questions concerning your
rights and interests with respect to this securities litigation matter, please
contact Zwerling Schachter (Kevin McGee, Esq. or Willy Gonzalez) at 1-800-721-
3900 or by e-mail at firstname.lastname@example.org or email@example.com.
The complaint alleges that defendants violated Sections 10(b) and 20(a) of
the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Statements issued by the defendants were materially false and misleading when
made because they failed to disclose that the Company used actual 90-day
London interbank offer rates (“LIBOR”) rates instead of the forward LIBOR
curve, which is customary, to value its floating rate interest only (“IO”)
Strips. As a result of such unusual methodologies, during the Class Period:
(1) the Company’s IO Strip portfolio was materially overvalued; (2) the
Company’s net income and net gain on mortgage loan sales were materially
overstated; (3) the Company’s return on equity and return on capital were
materially overstated; and (4) the Company’s reported net capital was
materially overstated. Defendants also failed to disclose to investors that
the Company’s risk management, hedging strategies, and internal controls were
deficient and would not protect the value of Doral’s IO Strip portfolio in a
rising-rate environment, despite repeated reassurances to the contrary.
On April 19, 2005, Doral announced that it was restating its financial
results for 2000 through 2004. The restatements were made to correct the
accounting treatment for the value of its IO Strip portfolio. The company
said the restatement will result in a decrease in the fair value of the
securities by $400 to $600 million. It said it estimates it will eventually
have to take a $290 million to $435 million charge for the required
adjustments. In a press release, the Company stated that “management concluded
that the previously filed interim and audited financial statements for the
periods from January 1, 2000, through December 31, 2004, could be materially
affected and, therefore, should no longer be relied on and that the financial
statements for some or all of the periods included therein should be
restated.” Since January 3, 2005, the price of Doral’s common stock has
dropped from $48.50 a share to below $16 a share.
Zwerling Schachter concentrates in prosecuting class actions nationwide on
behalf of investors. The firm currently plays a leading role in numerous
major securities and complex commercial litigations pending in federal and
state courts and has offices in New York City, Uniondale, New York, Boca
Raton, Florida and Seattle, Washington. The firm has been recognized by
courts throughout the country as highly experienced and skilled in complex
litigation, particularly with respect to federal securities class action
Visit our website at: http://www.zsz.com
Web Site: http://www.zsz.com