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NEW YORK, June 03, 2015 (GLOBE NEWSWIRE) -- Gainey McKenna & Egleston announces that a class action lawsuit has been filed in the United States District Court for the Southern District of Florida on behalf of all persons or entities who purchased Nationstar Mortgage Holdings Inc. (“Nationstar” or the “Company”) (NYSE:NSM) securities between February 27, 2014 and May 4, 2015, inclusive (“Class Period”).
The Complaint alleges that Defendants issued materially false and misleading statements about the Company’s business results and future financial prospects. The Complaint alleges that the Company claimed to be improving its profitability as a result of increased servicing revenue on its exponentially expanding MSR portfolio, leading to servicing fee profits, and as a result of profits being “earned” by its Solutionstar subsidiary, with which it had contracted to provide various loan services. However, the Complaint alleges that Nationstar failed to disclose deficiencies in management control and supervision necessary to ensure the Company’s compliance with applicable laws and regulations in connection with the servicing of MSRs, and that Nationstar had been overcharging mortgagors and illegally enhancing its profits through illicit practices, such as charging for repeated, unnecessary inspections, which resulted in additional late payment fees, and pressuring mortgagors to carry out expensive modifications and refinances on their mortgages. In addition, the Complaint also alleges that heightened regulatory scrutiny into MSR transferring and servicing, including a probe into the Company’s own loan servicing practices launched by the New York State Department of Financial Services in March 2014, was significantly increasing the Company’s costs of servicing MSRs and diminishing the profitability and carrying value of the Company’s MSR portfolio. According to the Complaint, Defendants’ false and misleading statements and omissions regarding the Company’s business, future revenues, operating results and financial prospects issued during the Class Period caused Nationstar common stock to trade at artificially inflated prices of as high as $38 per share.
The Complaint further alleges that due to a series of partial disclosures in late 2014 the price of the Company common stock began to decline, beginning with a November 6, 2014 report of declining third quarter 2014 financial results, followed in January 2015 with Nationstar being named as a defendant in a class action lawsuit brought in federal court in the Southern District of Florida on behalf of mortgagors alleging racketeering in connection with the collection of unlawful inspection fees. The Company’s stock price declined further on a February 26, 2015 report of dismal fourth quarter and fiscal 2014 financial results, and even further when the Company priced a March 25, 2015 equity offering well below market.
On May 5, 2015, the Company issued disappointing first quarter 2015 financial results. The Company reported a net loss of $48.3 million, or ($0.53) per share, as the Company’s revenues fell 15% year-over-year. Much of the loss came from a $110 million ($0.77 per share) write-down on the value of the Company’s MSRs. Following this series of partial disclosures, the price of Nationstar common stock fell, closing at $19.51 per share on May 5, 2015, nearly 50% below its Class Period high.
If you wish to serve as lead plaintiff, you must move the Court no later than August 3, 2015. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to join the litigation, or to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at email@example.com or firstname.lastname@example.org.
Attorney Advertising -- Prior results do not guarantee a similar outcome with respect to any future matter. Please visit our website at http://www.gme-law.com for more information about the firm.
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