US Law Firm Charles H Johnson & Assoc. Announce Filing of Securities Class Action Against Downey Financial Corp.

MINNEAPOLIS, May 27, 2008 (Lawfuel) — 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. ([email protected])
Charles H. Johnson & Associates
2599 Mississippi Street
New Brighton, MN 55112
(651) 633-5685

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