Allied Capital Corporation Case 10/29/2007

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Company Name(s): 
Allied Capital Corporation
Case Name: 
Allied Capital Corporation Case 10/29/2007
Case Status: 
Lawsuit Filed
Affected Securities
Lawsuit Overview
Type of Lawsuit: 
Securities Purchaser Class Action
Date Filed: 
Class Period Begin: 
Class Period End: 
Court of Filing: 
United States District Court for the District of Columbia

According to a press release from a law firm a shareholder has filed a lawsuit for a class of investors who purchased Allied Capital common stock at artificially inflated prices from March 1, 2006 through January 10, 2007 (the “Class Period”). The Action is pending before Judge Emmett G. Sullivan in the United States District Court for the District of Columbia.

The complaint filed in the Action alleges that throughout the Class Period, Defendants misrepresented and failed to disclose to investors material adverse facts concerning the Company’s financial condition and prospects. In particular, Defendants failed to disclose that Business Loan Express (“BLX”), one of Allied Capital’s subsidiaries, fraudulently procured and provided Section 7(a) Loans, backed by the U.S. Small Business Administration, to borrowers who had not made their required capital contributions or were otherwise ineligible to receive such loans. On January 11, 2007, Allied Capital issued a press release in which it revealed to investors what it had known all along, namely the improper loan practices at the Company’s BLX subsidiary. As a result of this news, the Company’s stock fell from the previous day’s closing price of $31.58 to close on January 11 at $29.40, a drop of $2.18 per share.