The complaint states that the December 1, 2006 Registration Statement was filed with the SEC so that National City could offer 2.4 million shares of stock to employees of Harbor Federal Savings Bank ("Harbor Bank") under the Harbor Bank Employee Stock Ownership Plan and the Harbor Bank Stock Incentive Plan (collectively, the "Harbor Bank Plans"). National City acquired Harbor Bank on December 1, 2006. The December 1, 2006 Registration Statement contained misleading statements and omissions that violated the Securities Act of 1933 ("1933 Act").

Plaintiffs’ allegations include that the Registration Statement was materially false and misleading in that it included misleading and inaccurate statements and/or failed to disclose: (i) the fact that the Company's portfolio of collateralized debt obligations ("CDOs"), many of which were backed by subprime mortgage loans, was dangerously overexposed to risky and impaired CDOs; (ii) the fact that the Company had failed to properly account for its highly leveraged loans and mortgage securities; (iii) the extent to which National City was exposed to securities backed by adjustable rate mortgages ("ARMS"), which would be toxic to the Company once housing prices stopped increasing at a rapid pace; (iv) the fact that the Company was using dangerously high levels of leverage to prop up its financial results, thereby exposing the Company to a severe liquidity crisis; (v) the fact that the Company's liquidity position had deteriorated to dangerously low levels.

The complaint further alleges the Registration Statement was also materially misleading and inaccurate in that it included misleading and inaccurate statements and/or failed to disclose material information about National City's loan origination and lending practices. In particular, the Registration Statement made materially misleading statements and/or failed to disclose: (i) that the Defendants had disregarded publicly stated underwriting and loan-origination practices to artificially inflate reported income, earnings and loan volume; (ii) that the Company had made a substantial amount of loans without requiring documentation confirming the credit-worthiness of borrowers; (iii) that the Company lacked the requisite internal controls to determine appropriate allowance for loan losses; (iv) that the Company understated reserves and allowances for loan losses which did not properly reflect the risk facing the Company for the purpose of artificially inflating the Company's reported income and earnings; (v) that the Company improperly mischaracterized high-risk, low documentation loans as prime loans as opposed to sub-prime loans; (vi) that the Company engaged in predatory lending practices; (vii) that the Company's purported financial success was the result of aggressively and improperly originating risky loans, without regard to its stated underwriting and origination policies, and without taking adequate reserves to reflect the risks associated with such loans; and (viii) that the Company did not properly value and failed to disclose the ineffectiveness of its hedging with respect to loans held for sale, MSRs and retained interests.

Defendant National City is a financial holding company that provides commercial and retail banking, mortgage financing and servicing, consumer finance, and asset management services in the United States. The Company is headquartered in Cleveland, Ohio.

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