NEW YORK, July 4, 2014 /PRNewswire/ --Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Doral Financial Corporation ("Doral" or the "Company") (NYSE: DRL) of the July 14, 2014 deadline to seek the role of lead plaintiff in a federal securities class action lawsuit filed against Doral and certain executives.
A complaint has been filed in the District of Puerto Rico on behalf of all persons who purchased Doral common stock between April 2, 2012 and May 1, 2014 (the "Class Period").
The complaint alleges that the Company and its executives violated federal securities laws with respect to its disclosures concerning its business, operations, and prospects.
The complaint further alleges that, during the Class Period, defendants issued materially false and misleading statements regarding the Company's financial performance and future prospects and failed to disclose adverse facts, including that: (a) the Company had a material weakness in its internal controls over financial reporting and disclosure controls, and that such controls were ineffective; (b) the Company had under-reserved for loan losses; (c) 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 throughout the Class Period and as required by bank regulators to operate the bank; and (d) as a result of the foregoing, defendants knew Doral Bank was undercapitalized and the Company was not on track to achieve the financial results they had led the market to expect during the Class Period.
On March 21, 2013, Doral issued a press release and filed its annual financial report on Form 10-K for the period ended December 31, 2013, disclosing that the Company had been forced to take an increased provision for loan and lease losses in the fourth quarter of 2013, and as a result, the Company was reporting a net loss for its 2013 fourth quarter. In addition, the Company stated that it would be forced to restate its previously reported financial statements. On this news, the price of Doral common stock declined. Then on May 1, 2014, after the close of trading, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission disclosing that the Puerto Rican government was disputing whether a purported tax receivable due Doral, which accounted for $289 million of the bank's $679 million of so-called Tier 1 capital as of the end of fiscal 2013, was indeed payable, and that the U.S. Federal Deposit Insurance Corporation ("FDIC") had advised Doral that it could not include the tax receivable in its Tier 1 capital ratio, rendering the bank significantly undercapitalized. Doral further disclosed that the FDIC had ordered Doral to revise its capital plan, which it stated could force the Company to sell assets.
On this news, the price of Doral common stock, which had traded as high as $25 per share in intraday trading during the Class Period, fell to a level approximately 85% from its Class Period high to close at $3.73 per share on May 2, 2014.
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Take Action
If you invested in Doral stock, bonds or options between April 2, 2012 and May 1, 2014 and would like to discuss your legal rights, visit www.faruqilaw.com/DRL. You can also contact us by calling Richard Gonnello toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to rgonnello@faruqilaw.com. Faruqi & Faruqi, LLP also encourages anyone with information regarding Doral's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
Faruqi & Faruqi, LLP is a national law firm which represents investors and individuals in class action litigation. The firm is focused on providing exemplary legal services in complex litigation in the areas of securities, shareholder, antitrust and consumer litigation, throughout all phases of litigation. The firm has an experienced trial team which has achieved significant victories on behalf of the firm's clients. To keep track of the latest securities litigation news, follow us on Twitter at www.twitter.com/MergerActivity or on Facebook at www.facebook.com/FaruqiLaw.
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