WASHINGTON, Nov. 9 /PRNewswire/ -- Klafter & Olsen LLP has filed a securities class action complaint against WSB Financial, Inc. ("WSB" or the "Company") and certain of its officers in the U.S. District Court for the Western District of Washington (Civil Action No. C-07-5618 JKA) on behalf of investors who purchased the common stock of WSB issued pursuant to the December 2006 Registration Statement and Prospectus during the period December 14, 2006 through October 23, 2007 (the "Class Period"). As described below, if you purchased WSB's common stock during the Class Period, you have until December 31, 2007 to move to be appointed as a Lead Plaintiff.
WSB is the holding company for Westsound Bank, a Bremerton, Washington based financial institution. The Complaint alleges that defendants, including the Company's top executives and the underwriter of WSB's initial public offering ("IPO"), D.A. Davidson & Co., violated the federal securities laws by issuing a materially misleading Registration Statement and Prospectus in connection with WSB's December 14, 2006 IPO. Specifically, the Complaint alleges that the Registration Statement and Prospectus misrepresented: (i) the adequacy of the Company's accounting policies, including that the Company's allowances for loan losses were adequate; (ii) that the Company maintained "a high quality loan portfolio"; and (iii) that the Company had complied "with all of the laws and regulations" relevant to its operations. Due to the Company's misleading statements, WSB stock traded as high as $21 per share during the Class Period.
The truth about the Company's accounting policies and compliance with applicable laws and regulations began to be revealed when, on September 21, 2007, WSB announced that it would eliminate 33 jobs in the mortgage division of the company, and that WSB's Executive Vice President of Sales and Lending at Westsound Bank was leaving the Company. As a result, WSB's stock price fell from $15.30 to $12.40. Then, after the market closed on October 23, 2007, WSB belatedly revealed that state and federal regulators were looking into possible fraud and misconduct in its real estate lending practices and that its CFO would be taking a leave of absence. Due to this announcement, the Company's stock collapsed to close at $4.73 on October 25 -- a drop of nearly 60 percent. Afterwards, WSB revealed that in the spring of 2007 the Washington State Department of Financial Institutions ("WSDFI") had identified a number of high end home construction loans -- now totaling at least 146 loans valued at $90 million -- for which WSB Financial had not obtained proper income documentation. As a result, the Company stopped making these loans as of April 2007 but never disclosed these facts until October 29, 2007.
If you purchased WSB common stock during the Class Period (December 14, 2006 - October 23, 2007), you may, no later than December 31, 2007, move to be appointed as a Lead Plaintiff. A Lead Plaintiff is a representative party that acts on behalf of other class members in directing the litigation. If you have sustained losses on your purchases of WSB's common during the Class Period, please contact Klafter & Olsen LLP at http://www.klafterolsen.com/ or call us at 202/261-3553 for a more thorough explanation of the Lead Plaintiff selection process and the claims that can be asserted against WSB.
Klafter & Olsen LLP has extensive expertise in prosecuting investor class actions involving financial fraud and has offices in Washington D.C. and New York. Please visit our website for more information about the Firm.
