Fremont General Corporation Case 03/05/2008

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Company Name(s): 
Fremont General Corporation
Case Name: 
Fremont General Corporation Case 03/05/2008
Case Status: 
Lawsuit filed
Affected Securities
OTC: FMNTQ
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
03/05/2008
Class Period Begin: 
05/09/2006
Class Period End: 
02/27/2007
Summary: 

On September 4, 2007, a securities class action was filed against Fremont General and certain individuals with similar allegations with class period May 9, 2006 to February 27, 2007.
 
On August 15, 2007, a Notice of Voluntary Dismissal was filed by the plaintiff. According to the Notice, notice is hereby given that pursuant to FRCP 41(a)(1), Plaintiff Susan D’Errico voluntarily dismisses the above-captioned Complaint without prejudice.
 
The complaint was filed for breach of fiduciary duty and violations of the Securities Exchange Act of 1934. Specifically, the complaint alleges that during the Class Period defendant issued statements concerning Fremont General’s business, operations and prospects which defendant knew or recklessly disregarded were materially false and misleading. As a result of defendant’s’ failure to disclose the Company’s improper business practices, Fremont General stock traded at artificially inflated prices during the Class Period.
 
The complaint alleges that on February 27, 2007, investors were shocked when Fremont General issued a press release disclosing that the Company would postpone filing its Form 10-K annual report for 2006 with the SEC, and that the Company “intends to file a Form l2b-25 with the Securities and Exchange Commission explaining the reasons therefor.” As a result of this news, the next day shares of the Company’s stock declined $2.84 per share, or 24 percent, to close on February 28, 2007, at $8.81 per share, on unusually heavy trading volume.
 
The complaint further alleges that on March 2, 2007, the Company filed a Form 12b-25 with the SEC informing investors that the Company was unable to timely file its Form 10-K and - even more disturbing - that the Company intended to exit its subprime residential real estate lending business.