Accredited Home Lenders Holding Company (NASDAQ: LEND) Investor Securities Class Action Lawsuit 03/16/2007

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Company Name(s): 
Accredited Home Lenders Holding Company
Case Name: 
Accredited Home Lenders Holding Company Shareholder Class Action Lawsuit 03/16/2007
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NASDAQ: LEND
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
03/16/2007
Class Period Begin: 
11/01/2005
Class Period End: 
03/12/2007
Court of Filing: 
U.S. District Court for the Southern District of California
Deadline To File for Lead: 
05/18/2007
Date Settled: 
11/04/2009
Settlement Amount: 
$22,000,000
Deadline to Participate in Settlement: 
11/17/2009
Summary: 

June 4, 2010 - The court ordered the authorization of the distribution of the net settlement fund.

November 4, 2009 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorneys' fees and expenses, and dismissed the action with prejudice.

November 2, 2009 - The court held a final settlement hearing.

August 4, 2009 - The court preliminarily approved the settlement.

May 19, 2009 - Defendant filed notification of bankruptcy.

January 4, 2008 - The court granted in part and denied in part the defendants' motions to dismiss with leave to amend.

November 2, 2007 - Defendants filed motions to dismiss.

August 24, 2007 - The lead plaintiff filed a corrected second amended consolidated complaint.

August 23, 2007 - The lead plaintiff filed an amended consolidated complaint

June 25, 2007 - The lead plaintiff and lead counsel were appointed and all cases were consolidated.

May 15, 2007 - Lead plaintiff motions were filed.

May 9, 2007 - Another investor filed a complaint in the U.S. District Court for the Southern District of California on behalf of investors who purchased Accredited Home Lenders Holding Company (NASDAQ: LEND) common shares between January 28, 2004 and March 12, 2007.

March 16, 2007 - An investor in shares of Accredited Home Lenders Holding Company (formerly NASDAQ: LEND) filed a lawsuit in the U.S. District Court for the Southern District of California against Accredited Home Lenders Holding Company over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between November 1, 2005 and March 12, 2007.

According to the complaint the plaintiff charges Accredited Home Lenders Holding Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that between November 1, 2005 and March 2007 defendant issued materially false and misleading statements regarding Accredited Home Lenders Holding Company’s business and financial results. As a result of defendants’ false statements, Accredited Home Lenders Holding Company (NASDAQ: LEND) stock traded at artificially inflated prices during November 1, 2005 and March 12, 2007, reaching a high of $58.45 per share on May 11, 2006.

On February 14, 2007, Accredited Home Lenders Holding Company issued a press release announcing disappointing profitability. Then, on March 12, 2007, after the market closed, Accredited Home Lenders Holding Company issued a press release announcing that Accredited Home Lenders Holding Company was exploring various strategic options. Accredited Home Lenders Holding Company reported that it had paid approximately $190 million in margin calls on its facilities since January 1, 2007. In addition, Accredited Home Lenders Holding Company was seeking waivers and extensions of waivers of certain financial and operating covenants under its warehouse and repurchase facilities. On March 13, 2007, Accredited Home Lenders Holding Company’s (NASDAQ: LEND) stock collapsed $7.43 per share to close at $3.97 per share, a one-day decline of 65% on volume of 41.9 million shares, 20 times the average three-month volume.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during November 1, 2005 and March 12, 2007, were as follows: (a) Accredited Home Lenders Holding Company lacked requisite internal controls, and, as a result, Accredited Home Lenders Holding Company’s projections and reported results issued during November 1, 2005 and March 12, 2007 were based upon defective assumptions and/or manipulated facts; (b) Accredited Home Lenders Holding Company’s financial statements were materially misstated due to its failure to properly account for its allowance for loan repurchase losses; (c) given the deterioration and the increased volatility in the sub-prime market, Accredited Home Lenders Holding Company would be forced to tighten its underwriting guidelines which would have a direct material negative impact on its loan productions going forward; and (d) given the increased volatility in the sub-prime market, Accredited Home Lenders Holding Company had no reasonable basis to make projections about its 2007 results. As a result, Accredited Home Lenders Holding Company’s projections issued during the Class Period about its 2007 results were at a minimum reckless. As a result of defendants’ false statements, Accredited Home Lenders Holding Company’s (NASDAQ: LEND) stock price traded at inflated levels during the November 1, 2005 and March 12, 2007. However, after the above revelations seeped into the market, Accredited Home Lenders Holding Company’s (NASDAQ: LEND) shares were hammered by massive sales, sending them down more than 65% from their Class Period high.

Accredited Home Lenders Holding Company operates as a mortgage banking company in the United States and Canada.