Doral Financial Corporation (NYSE: DRL) Investor Securities Class Action Lawsuit 05/13/2014

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Company Name(s): 
Doral Financial
Case Name: 
Doral Financial Shareholder Class Action Lawsuit 05/13/2014
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Affected Securities
NYSE: DRL
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
05/13/2014
Class Period Begin: 
04/02/2012
Class Period End: 
05/01/2014
Court of Filing: 
U.S. District Court for the District of Puerto Rico
Deadline To File for Lead: 
07/14/2014
Date Settled: 
04/21/2016
Settlement Amount: 
$7,000,000
Deadline to Participate in Settlement: 
08/29/2016
Summary: 

August 8, 2016 - The court approved the settlement and entered the orders approving the plan of allocation, the motion for attorneys’ fees and expenses, and dismissing the action with prejudice.

April 21, 2016 - The court preliminarily approved the settlement.

April 15, 2016 - Parties filed a stipulation of settlement.

July 22, 2015 - The court granted in part and denied in part defendants' motion to dismiss.

December 23, 2014 - The defendants filed a motion to dismiss.

November 6, 2014 - The lead plaintiffs filed a consolidated amended complaint.

May 20, 2014 - Another investor filed a complaint.

May 13, 2014 - An investor in shares of Doral Financial Corporation (NYSE: DRL) filed a lawsuit in the U.S. District Court for the District of Puerto Rico against Doral Financial Corporation over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between April 2, 2012 and May 1, 2014.

According to the complaint the plaintiff alleges on behalf of all persons or entities who purchased or otherwise acquired securities of Doral Financial Corporation (NYSE: DRL) between April 2, 2012 and May 1, 2014, that the defendants violated Federal Securities Laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

More specifically, the plaintiff claims that between April 2, 2012 and May 1, 2014, defendants issued allegedly materially false and misleading statements regarding Doral Financial Corporation’s financial performance and future prospects and failed to disclose adverse facts, including that Doral Financial Corporation had a material weakness in its internal controls over financial reporting and disclosure controls, and that such controls were ineffective, that Doral Financial Corporation had under-reserved for loan losses, that as a result of having under-reserved for loan losses, the Company’s assets were overstated, its expenses were understated, its net income was overstated, and Doral Bank did not meet its Tier I regulatory capital requirements as stated between April 2, 2012 and May 1, 2014 and as required by bank regulators to operate the bank and that as a result of the foregoing, defendants knew Doral Bank was undercapitalized and Doral Financial Corporation was not on track to achieve the financial results they had led the market to expect during April 2, 2012 and May 1, 2014.

Doral Financial Corporation reported that its annual Net Loss increased from $3.30 million in 2012 to $88.29 million in 2013. Shares of Doral Financial Corporation (NYSE: DRL) split 1:20 on June 28, 2013. Since then NYSE: DRL shares declined from $24.75 per share in July 2013 to $8.59 per share in March 2014.

On March 21, 2013, Doral Financial Corporation disclosed that it had been forced to take an increased provision for loan and lease losses in the fourth quarter of 2013, and as a result, Doral Financial Corporation was reporting a net loss for its 2013 fourth quarter. In addition, Doral Financial Corporation stated that it would be forced to restate its previously reported financial statements.

Then on May 1, 2014, Doral Financial Corporation announced that it is in the process of developing a revised capital plan intended to enable Doral Financial Corporation to remain in compliance with the requirements of its regulators Doral Financial Corporation said that among other things, this revised plan is intended to address a recent determination by the Federal Deposit Insurance Corporation (the "FDIC") regarding the treatment of tax receivables from the Government of Puerto Rico. Shares of Doral Financial Corporation (NYSE: DRL) shares declined from $9.82 per share on May 1, 2014, to $2.56 per share on May 7, 2014.

On May 13, 2014, Doral Financial Corporation (NYSE: DRL) shares closed at $3.67 per share.