Ambac Financial Group Inc Ambac Financial Group Inc (OTC: ABKFQ) Investor Securities Class Action Lawsuit 01/16/2008

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Company Name(s): 
Ambac Financial Group
Case Name: 
Ambac Financial Group Shareholder Class Action Lawsuit 01/16/2008
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
OTC: ABKFQ
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
01/16/2008
Class Period Begin: 
10/19/2005
Class Period End: 
07/18/2009
Court of Filing: 
U.S. District Court for the Southern District of New York
Deadline To File for Lead: 
03/17/2008
Date Settled: 
09/28/2011
Settlement Amount: 
$33,000,000
Deadline to Participate in Settlement: 
10/24/2011
Summary: 

November 18, 2013 - The court ordered the authorization of the distribution of the net settlement fund.

September 28, 2011 - The court approved the motion for attorneys’ fees and expenses.

June 14, 2011 - The court preliminarily approved the settlement.

May 6, 2011 - Parties filed a stipulation of settlement.

February 22, 2010 - The court granted in part and denied in part the defendants' motions to dismiss.

August 27, 2009 - The defendants filed renewed motions to dismiss.

July 15, 2009 - The court withdrew the defendants' motions to dismiss without prejudice to refiling motions to dismiss.

October 21, 2008 - The defendants filed motions to dismiss.

August 25, 2008 - The lead plaintiffs filed an amended complaint on behalf of investors who purchased Ambac Financial Group Inc (OTC: ABKFQ) common shares between October 25, 2006 and April 22 , 2008. The lead plaintiffs allege that the defendants violated the Securities Act of 1933 and the Securities Exchange Act of 1934 by issuing false and misleading statements between October 25, 2006 and April 22 , 2008.

May 9. 2008 - The lead plaintiffs and lead counsel were appointed and all cases were consolidated.

March 17, 2008 - Lead plaintiff motions were filed.

January 16, 2008 - An investor of shares in Ambac Financial Group Inc (OTC: ABKFQ) filed a lawsuit in the U.S. District Court for the Southern District of New York against Ambac Financial Group Inc over alleged violations of Federal Securities Laws.

The plaintiff alleges that Ambac Financial Group Inc and certain of its officers and directors violated the Securities Exchange Act of 1934. The complaint claims that between October 19, 2005 and November 26, 2007, defendants issued materially false and misleading statements regarding Ambac Financial Group Inc’s business and financial results related to its insurance coverage on collateralized debt obligations (“CDO”) contracts. According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during October 19, 2005 to November 26, 2007 were as follows: (i) that Ambac Financial Group Inc lacked requisite internal controls to ensure that Ambac Financial Group Inc’s underwriting standards and its internal rating system for its CDO contracts were adequate, and, as a result, Ambac Financial Group Inc’s projections and reported results issued during the Class Period were based upon defective assumptions and/or manipulated facts; (ii) that Ambac Financial Group Inc’s financial statements were materially misstated due to its failure to properly account for its mark-to-market losses; (iii) that, given the deterioration and the increased volatility in the mortgage market,Ambac Financial Group Inc would be forced to tighten its underwriting standards related to its asset-backed securities, which would have a direct material negative impact on its premium production going forward; (iv) that Ambac Financial Group Inc had far greater exposure to anticipated losses and defaults related to its CDO contracts containing subprime loans, including even highly rated CDOs, than it had previously disclosed; (v) that Ambac Financial Group Inc had far greater exposure to a potential ratings downgrade from one of the credit ratings agencies than it had previously disclosed; and (vi) that defendants’ Class Period statements about Ambac Financial Group Inc’s selective underwriting practices during the 2005 through 2007 timeframe related to its CDOs backed by subprime assets were patently false; as Ambac Financial Group Inc’s underwriting standards were at best aggressive and at a minimum were completely inadequate. As the truth began to be disclosed, shares of Ambac Financial Group Inc's common stock plummeted, causing substantial losses to investors.

Ambac Financial Group Inc is a holding company whose subsidiaries provide financial guarantee products and other financial services to clients in both the public and private sectors around the world. Ambac Financial Group Inc and its subsidiaries operate in two segments: financial guarantee and financial services.