According to a press release dated April 5, 2005, the complaint charges MBIA and certain of its officers and directors with violations of the Securities Exchange Act of 1934. More specifically, the Complaint allege sthat the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that MBIA, during the Class Period, overleveraged itself, deeply under-reserved against possible credit defaults, and overly exposed to guaranteeing risky structured financings; (2) that MBIA accelerated its recognition of current income, by classifying many of its upfront guarantee fees as advisory fees taken at closing, rather than as accounted for over the life of the bonds insured; (3) that MBIA improperly booked a $70 million payment received from Converium Re (then called Zurich Reinsurance North America) in 1998, which at the time was depicted as a loss-reducing reinsurance recovery for MBIA, but was, in substance, a loan; (4) that as a result of this, MBIA financial statements were materially overstated by $60million; (5) that MBIA artificially inflated premium income and portfolio credit quality by insuring bonds in the secondary market that were attracting prices lower than their stale credit ratings would dictate; (6) that MBIA's low loss ratios resulted from the Company's practice to defer recognizing problems rather than providing layers of excess collateral, other underwriting protection, and its self-proclaimed prowess at restructurings; (7) that MBIA set forth an illegal scheme of covering the loss, from the failed Allegheny Health, Education and Research Foundation ("AHERF") bond issuance, with a retroactive reinsurance policy, giving it a reinsurance recovery of $170million to cover the present value of the future AHERF interest and principal payments, which resulted in MBIA showing a better than 40% jump in pretax income that year -- $565 million over what the income figure would have been without resort to the reinsurance; (8) that MBIA was dumping on Channel Reinsurance Ltd., a Bermuda reinsurer where MBIA owns a 17.4% interest, performing but troubled policies from its existing portfolio, with the proviso that it could make up any quality problems later so that MBIA could buy time by getting potential workout loans off its balance sheet in order make its financial results appear better; and (9) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company.

The complaint further alleges that on or around November 18, 2004, MBIA issued a press release wherein it announced that "it received identical document subpoenas today from the Securities and Exchange Commission and the New York Attorney General's office requesting information with respect to non-traditional or loss mitigation insurance products developed, offered or sold by MBIA to third parties from January 1, 1998 to the present." On March 8, 2005, MBIA announced that it had decided to restate its financial statements for 1998 and subsequent years. The restatement was being made to correct the accounting treatment for two reinsurance agreements that MBIA entered into in 1998 with Converium Re (previously known as Zurich Reinsurance North America). Then on March 9, 2005, MBIA announced that it had received a subpoena from the U.S. Attorney's Office for the Southern District of New York seeking information related to the reinsurance agreements it entered into in connection with the loss it incurred in 1998 on bonds insured by MBIA Insurance Corp. that were issued by Allegheny Health, Education and Research Foundation ("AHERF"). On March 30, 2005, after the market closed, MBIA announced that it received additional requests from the New York Attorney General's Office (NYAG) and the Securities and Exchange Commission (SEC) that supplement the subpoenas it received in late 2004. On this news, shares of MBIA fell $4.36 per share, or 7.7 percent, to close at $52.28 per share on unusually heavy trading volume.

If you bought MBIA Inc. securities between August 05, 2003 and March 30, 2005, inclusive, and would like to obtain information about the lawsuit, then you are invited to call (866) 467-1400 to speak with an attorney.