SOURCE: Schoengold Sporn Laitman & Lometti, P.C.

April 29, 2005 11:14 ET

Schoengold Sporn Laitman & Lometti, P.C. Announces Class Action Lawsuit Against Doral Financial Corp. (DRL)

NEW YORK, NY -- (MARKET WIRE) -- April 29, 2005 -- Schoengold Sporn Laitman & Lometti, P.C. filed a class action lawsuit against Doral Financial Corp. ("DRL" or the "Company") (NYSE: DRL) and certain key officers and directors in the United States District Court for the Southern District of New York on behalf of all purchasers of DRL securities during the period between January 17, 2001 and April 19, 2005 (the "Class Period"). If you purchased DRL securities during the Class Period and would like to join the action pursuing securities claims against the Company and its officer and director defendants, you may do so by visiting Schoengold Sporn Laitman & Lometti's website at www.spornlaw.com or contacting Schoengold Sporn Laitman & Lometti, toll free at (866) 348-7700 or via e-mail at shareholderrelations@spornlaw.com. However, please note that the deadline to seek lead plaintiff status in this case expires June 20, 2005.

The complaint alleges that during the Class Period, defendants made materially false and misleading statements regarding the Company's business and prospects. On March 15, 2005, Doral filed its Annual Report on Form 10-K with the Securities and Exchange Commission ("SEC"). In its 2004 Annual Report, the Company disclosed for the first time its use of overly aggressive assumptions in valuing its derivatives portfolio of IO Strips. In a matter of days, Doral stock plummeted from $38.29 per share to $21.50 per share in extremely heavy volume.

Then on April 19, 2005, the Company announced that "after consulting with various financial institutions and other firms with experience in valuation issues, the Company has determined that it is appropriate to correct the methodology used to calculate the fair value of its portfolio of floating rate interest only strips ("IOs"). The Company's preliminary estimate is that this correction will result in a decrease in the fair value of its floating rate IOs of between $400 million to $600 million as of December 31, 2004." As a result of these false statements, Doral's stock price traded at inflated levels during the Class Period; however, after the truth was revealed in Doral's press release on April 19, 2005, the Company's shares fell to below $16 per share.

According to the complaint, the true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company was using overly aggressive and unrealistic assumptions to value its derivative portfolio of IO Strips used to hedge its mortgage portfolio against interest rate fluctuations; (b) the Company was using fraudulent accounting practices and materially overstated its net income, net gain on mortgage loan sales and net capital; and (c) the Company was using ineffective risk management and hedging strategies against the increasing risk of rising interest rates.

If you purchased DRL securities during the Class Period and either sold those securities at a loss or still hold them, you may request that the Court appoint you as a lead plaintiff. However, you must do so before June 20, 2005.

Schoengold Sporn Laitman & Lometti was established in 1962 and has specialized in securities fraud litigation for over 35 years. The firm was cited by the Wall Street Journal in a study of the largest recoveries, as a percentage of overall damages, for its recoveries in the Anadigics and Versatility cases, which ranked first and third for recovering 44% and 30%, respectively, of plaintiffs' overall losses. Most recently, in 2004, the firm recovered $40 million for a class of Nicor, Inc. shareholders, representing approximately 35% of recoverable damages.

If you would like to further discuss your rights, you may call collect or otherwise contact the undersigned, who will be pleased to assist:

Contact Information

  • CONTACT:

    Jay P. Saltzman, Esq.
    Frank R. Schirripa, Esq.
    Schoengold Sporn Laitman & Lometti, P.C.
    19 Fulton Street, Suite 406
    New York, New York 10038
    Tel: (212) 964-0046
    Fax: (212) 267-8137
    Toll Free: (866) 348-7700
    E-Mail: shareholderrelations@spornlaw.com
    Website: www.spornlaw.com