PMI Group Agrees to Settlement In Shareholder Class Action
September 2010 - To all persons who purchased or otherwise acquired the common stock of The PMI Group, Inc. (“PMI”) from November 2, 2006 to March 3, 2008, inclusive, your rights may be affected by proceedings in this litigation. Please note that if you are a class member, you may be entitled to share in the proceeds of a settlement.
On May 6, 2010, Lead Plaintiff filed a motion for class certification. Defendants did not oppose the motion for class certification. The parties attended a mediation session in San Francisco on June 10, 2010; each side submitted comprehensive mediation statements setting forth the strengths and weaknesses of their case. The first mediation session, lasting approximately eight hours, did not result in a settlement, however the mediator continued to engage the parties in ongoing settlement discussions. On July 13, 2010, after more than eight hours of further mediation, the parties reached an agreement-in-principle and signed a memorandum of understanding.
The proposed settlement creates a fund in the amount of $31,250,000 in cash and will include interest that accrues on the fund prior to distribution. Your ability to recover from the Settlement Fund will depend on a number of variables, including the number of shares of PMI common stock you purchased or acquired during the period from November 2, 2006 through and including March 3, 2008, and the timing of your purchases and any sales.
A final approval hearing will be held on December 16, 2010. The purpose of the Final Approval Hearing will be to determine: (1) whether the settlement consisting of $31,250,000 in cash should be approved as fair, reasonable, and adequate to the Class; (2) whether the proposed plan to distribute the settlement proceeds (the “Plan of Allocation”) is fair, reasonable, and adequate; and (3) whether the application by Lead Counsel for an award of attorneys’ fees and expenses and reimbursement of the expenses of the Lead Plaintiff should be approved.
March 2003 - According to a press release dated March 12, 2003, a complaint charges PMI with violations of the Securities Exchange Act of 1934. PMI, through its subsidiaries, provides credit enhancement products designed to promote homeownership and facilitate mortgage transactions in the capital markets in the United States, Australia, New Zealand and the European Union. The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results. As a result of defendants’ false statements, PMI stock traded at artificially inflated prices during the Class Period, reaching its Class Period high of $50.21 per share in February 2007. Then, on March 3, 2008, after the market closed, PMI announced its preliminary fourth quarter 2007 financial results and that it would be delayed in filing its Form 10-K for year-end 2007 because it was awaiting financial information from an equity investee, FGIC Corporation (“FGIC”), that was necessary for the Company to complete its financial statements. On this news, PMI’s stock collapsed to $6.43 per share on March 4, 2008, a one-day decline of 5% and an 87% decline from its Class Period high in February 2007.
Shareholders filed a putative class action in the U.S. District Court for the Northern District of California against subprime mortgage insurer PMI Group Inc. over losses stemming from the subprime mortgage market collapse. The plaintiffs accuse PMI Group Inc. and its executives of insider trading, concealing its exposure to home loan defaults and failing to engage in proper underwriting.