According to a press release dated April 27, 2005, the complaint charges R&G Financial and certain of its officers with violations of the Securities Exchange Act of 1934. Specifically, the complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that R&G Financial's earnings quality had been significantly weakened by the Company's use of more aggressive assumptions to generate gain on sale income, as well as to the value it retained in its interest only ("IO") residuals in securitization transactions; (2) that R&G Financial's methodology used to calculate the fair value of its IO residual interests retained in securitization transactions was incorrect and caused the Company to overstate its financial results by at least $50 million; (3) that the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP");(4) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (5) that as a result, the value of the Company's net income and financial results were materially overstated at all relevant times.

The complaint further alleges that on or around March 25, 2005, after the market had closed, R&G Financial announced that it would restate its financial results for fiscal years 2003 and 2004. News of this shocked the market. Shares of R&G Financial, on April 26, 2005, fell $8.14 per share, or 35.12 percent, to close at $15.04, on unusually heavy trading volume. After the market closed on April 26, 2005, R&G Financial issued a press release wherein it announced that it was subject to an informal SEC probe relating to its restatement announcement.

R&G Financial is a Puerto Rico-chartered, financial holding company that operates R-G Premier Bank of Puerto Rico (Premier Bank) a Puerto Rico commercial bank, and R-G Crown Bank (Crown Bank), a Florida domiciled federal savings bank. The Company also operates R&G Mortgage Corp (R&G Mortgage) in Puerto Rico, The Mortgage Store of Puerto Rico, Inc. (Mortgage Store), a subsidiary of R&G Mortgage and Continental Capital Corp. (Continental), a mortgage-banking subsidiary of Crown Bank, which does business in the continental United States.

If you bought R&G Financial Corporation securities between April 21, 2003 and April 25, 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.