SOURCE: Milberg LLP

August 06, 2009 16:37 ET

Bernstein Litowitz Berger & Grossmann LLP and Milberg LLP Announce the Filing of a Stockholder Derivation Action on Behalf of the Ryland Group, Inc. Alleging Breaches of Fiduciary Duties by Directors

NEW YORK, NY--(Marketwire - August 6, 2009) - A stockholder derivative lawsuit was filed on April 3, 2009, in the Superior Court of the State of California, County of Los Angeles on behalf of The Ryland Group, Inc. ("Ryland" or the "Company") (NYSE: RYL) against Ryland's Board of Directors ("Defendants") and certain of its executive officers. Ryland is engaged in home building and mortgage-lending and financing in the United States. The action alleges breaches of fiduciary duty, waste of corporate assets, unjust enrichment and violations of state and federal laws during the period January 1, 2003 through the present ("Relevant Period"). The action is captioned City of Miami Police Relief Pension Fund v. R. Chad Dreier, et al. and is numbered BC411143.

As detailed in the complaint, a report by the Office of Inspector General for the United States Department of Housing and Urban Development (HUD) indicated that Ryland was in violation of HUD monitoring requirements and even then, Defendants failed to implement an appropriate quality control plan. To the contrary, according to the complaint, Defendants breached their fiduciary duties to Ryland by fostering and encouraging a reckless business and lending environment at Ryland. According to the complaint, Defendants violated their obligations to provide quality loans to qualified and creditworthy borrowers, in order to inflate short term results and to overcompensate top executives.

The complaint further alleges that Defendants engaged in these improper practices to create false and inflated demand for Ryland's homes, loans, and other products, and in doing so, have materially misrepresented (among other things) the financial and business condition, results, performance, and future prospects of the Company.

Moreover, according to the complaint, Company insiders sold massive amounts of their personally held Ryland stock while defendants caused Ryland to spend hundreds of millions of dollars to repurchase Ryland stock. Thus, defendants allegedly forced Ryland to waste stockholder money to buy the Ryland stock that insiders (including many of the defendants themselves) were selling.

On June 30, 2009, the Court entered an Order which, among other things, designated Bernstein Litowitz Berger & Grossmann LLP and Milberg LLP as Co-Lead Counsel in this action.

This press release is intended as a broad summary of the 67-page complaint, which is available from the Court and can be viewed on the websites of the law firms that filed the action, identified below.

If you have any questions, you may contact the law firms that filed the complaint.

Contact Information

  • Contact:

    Mark Lebovitch
    Bernstein Litowitz Berger & Grossmann LLP
    1285 Avenue of the Americas
    New York, NY 10019
    Phone Number: (800) 380-8496
    Email: MarkL@blbglaw.com

    Timothy A. DeLange
    Bernstein Litowitz Berger & Grossmann LLP
    12481 High Bluff Drive, Suite 300
    San Diego, CA 92130
    Phone Number: (800) 380-8496
    Email: Timothyd@blbglaw.com

    or

    Andrei Rado or Kent Bronson
    Milberg LLP
    One Pennsylvania Plaza, 49th Fl.
    New York, NY 10119-0165
    Phone number: (800) 320-5081
    Email: contactus@milberg.com

    Sabrina Kim
    Milberg LLP
    300 South Grand Avenue, Suite 3900
    Los Angeles, CA 90071
    Phone number: (800) 320-5081
    Email: contactus@milberg.com

    Co-Lead Counsel for the Plaintiff

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