IndyMac Bancorp Inc (NYSE: IMB) Investor Securities Class Action Lawsuit 06/11/2008

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Company Name(s): 
IndyMac Bancorp
Case Name: 
IndyMac Bancorp Shareholder Class Action Lawsuit 06/11/2008
Case Status: 
Settlement Approved
Affected Securities
NYSE: IMB
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
06/11/2008
Class Period Begin: 
03/01/2007
Class Period End: 
05/12/2008
Court of Filing: 
U.S. District Court for the Central District of California
Date Settled: 
07/29/2013
Settlement Amount: 
$6,500,000
Deadline to Participate in Settlement: 
01/18/2013
Summary: 

July 29, 2013 - 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.

August 10, 2012 - The court preliminarily approved the settlement.

July 2, 2012 - Parties filed a stipulation of settlement.

June 6, 2012 - The court granted auditor defendant's motion to dismiss with prejudice.

March 15, 2012 - The defendants filed a motion to dismiss.

May 27, 2011 - The lead plaintiff filed a fifth amended complaint.

September 9, 2010 - The lead plaintiff filed a fourth amended complaint.

August 9, 2010 - The court granted the defendants' motions to dismiss and granted lead plaintiff leave to file an amended complaint.

November 2, 2009 - The defendants filed motions to dismiss.

October 9, 2009 - The lead plaintiff filed a third amended complaint.

April 24, 2009 - The defendants filed a motion to dismiss.

March 20, 2009 - The lead plaintiff filed a second amended complaint on behalf of investors who purchased IndyMac Bancorp Inc (NYSE: IMB) common shares between March 1, 2007 and May 12, 2008. The lead plaintiff alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between March 1, 2007 and May 12, 2008.

January 27, 2009 - The lead plaintiff filed an amended consolidated complaint.

September 12, 2008 - The lead plaintiff and lead counsel were appointed and all cases were consolidated.

August 11, 2008 - Lead plaintiff motions were filed.

June 11, 2008 - An investor in shares of IndyMac Bancorp Inc (NYSE: IMB) filed a lawsuit in the U.S. District Court for the Central District of California against IndyMac Bancorp Inc over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between August 16, 2007 and May 12, 2008.

The complaint alleges that between August 16, 2007 and May 12, 2008, IndyMac Bancorp Inc issued materially false and misleading statements regarding IndyMac Bancorp Inc’s business and financial results. Specifically, defendants downplayed and concealed IndyMac Bancorp Inc’s growing exposure to non-performing assets, particularly loans in its pay-option adjustable-rate mortgage (”Option ARM”) and homebuilder construction portfolios, and made numerous positive representations regarding IndyMac Bancorp Inc’s capital position to alleviate investors’ fears concerning IndyMac Bancorp Inc’s capital erosion. As a result of defendants’ false statements, IndyMac Bancorp Inc stock (NYSE: IMB) traded at artificially inflated prices, reaching a high of $24.55 per share in October 2007.

Then on May 12, 2008, IndyMac Bancorp Inc announced its first quarter 2008 financial results, including a net loss of $184.2 million, or ($2.27) per share, compared with net earnings of $52.4 million, or $0.70 per share, in the first quarter of 2007. On this news, IndyMac Bancorp Inc’s stock dropped to close at $2.32 per share - a two-day decline of $1.11 per share, or 32%, and a decline of 91% from $24.55 per share on October 2, 2007.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public between August 16, 2007 and May 12, 2008, were as follows: (a) IndyMac Bancorp Inc was not adequately reserving for its losses on mortgage-related assets in violation of generally accepted accounting principles; (b) IndyMac Bancorp Inc had far greater exposure to anticipated losses and defaults concerning its book of business related to its homebuilder and Option ARM portfolios than it had previously disclosed; (c) IndyMac Bancorp Inc’s capital base was not adequate enough to withstand the significant deterioration in the credit and real estate markets and could jeopardize IndyMac Bancorp Inc’s status as “well capitalized;” (d) IndyMac Bancorp Inc had not adequately reserved for Option ARMs; and (e) given IndyMac Bancorp Inc’s exposure to the increased volatility in the credit and real estate markets, IndyMac Bancorp Inc had no reasonable basis to make projections about its earnings.