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Case ID: 5039 | Stocks | 07/17/2008
On March 31, 2008, several motions were filed by different groups and individuals to be appointed as lead plaintiffs, lead counsels as well as to consolidate cases. A response to the above mentioned motion was filed on April 17, 2008 by SLM Venture. Just as quickly, a memorandum of law in opposition of consolidating cases, to appoint lead plaintiffs and counsels was filed by Sheet Metal Workers Pension Fund Trust at the same time.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results and, despite evidence that Sallie Mae’s loan loss provisions for its subprime borrowers attending non-traditional schools were inadequate both prior to and at the start of the Class Period, defendants failed to adequately reserve for losses in Sallie Mae’s non-traditional portfolio. As a result of defendants’ false statements, Sallie Mae’s stock traded at artificially inflated prices during the Class Period, reaching a Class Period high of $57.98 per share in July 2007. On January 3, 2008, the Company disclosed in an SEC filing that it would be cutting back on its core business of lending to students by being “more selective” in making students loans due to turmoil in the credit markets and a new federal law that slashed subsidies to the private companies that make government-backed student loans. On this news, Salle Mae’s stock dropped $2.49 per share to close at $16.67 per share, a one-day decline of 15%. According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) the Company failed to engage in proper due diligence in originating student loans to subprime borrowers, particularly those attending non-traditional institutions; (b) the Company was not adequately reserving for uncollectible loans in its non-traditional portfolio in violation of generally accepted accounting principles, causing its financial results to be materially misstated; (c) the Company had far greater exposure to anticipated losses and defaults related to its non-traditional loan portfolio than it had previously disclosed; and (d) given the deterioration and the increased volatility in the subprime market and reductions in federal subsidies, the Company would be forced to tighten its lending standards on both its federal loans and private education loans which would have a direct material negative impact on its loan originations going forward.
At Lawcash.com, it is our goal to keep you informed about important legal cases, class actions and settlements. Our lawyers offer free legal evaluations in tort cases, class actions, personal injury, and other lawsuits because we are dedicated to helping you resolve your legal complaints. Other Stocks Cases of Interest According to a press release dated March 19, 2008, a class action lawsuit was filed on behalf of persons who purchased Auction Rate Securities from TD Ameritrade Holding Corporation and TD Ameritrade, Inc., formerly known as TD Waterhouse Investor Services, Inc. during the Class Period and who continued to hold such securities as of February 13, 2008. A class action has been filed against Coca-Cola Enterprises, Inc. (CCE), certain of its officers and directors by stockholders who purchased the company's common stock between October 15, 2003 and July 28, 2004. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. A class action has been filed against Brooks Automation, Inc. (BRKS), certain of its officers and directors by stockholders who purchased the company's common stock between July 25, 2001 and May 22, 2006. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. A class action has been filed against flow control equipment manufacturer Flowserve Corporation (NYSE: FLS) and certain of its officers and directors by stockholders who purchased the company's common stock between October 23, 2001, and September 27, 2002. According to a press release dated April 2, 2008, the Complaint alleges that E*TRADE violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by deceiving investors about the investment characteristics of auction rate securities and the auction market in which these securities traded. Auction rate securities are either municipal or corporate debt securities or preferred stocks which pay interest at rates set at periodic “auctions.” Auction rate securities generally have long-term maturities or no maturity dates.
Litigation is ongoing in several consolidated class actions filed against scrap iron company Philip Services Corporation (Pink Sheets:PPSVF.PK), certain of its officers and directors, and affiliated accounting firms by stockholders who purchased the company's common stock between February 28, 1996, and May 7, 1998. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. |
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