KO&L LLP FILES CLASS ACTION LAWSUIT AGAINST NEW CENTURY FINANCIAL CORP.
On February 15, 2007, KO&L LLP filed a class action lawsuit in the United States District Court for the Central District of California on behalf of purchasers of the common stock and other securities of New Century Financial Corp. (“New Century” or the “Company”) (NYSE: NEW) who purchased during the period from May 4, 2006 through February 7, 2007, inclusive (the “Class Period”). The claims against New Century and certain of its officers and directors allege that the defendants violated the federal securities laws by making false and misleading statements and omissions concerning the Company’s operations and financial results for the first three quarters of 2006.
On February 7, 2007 the Company shocked the market by announcing that it was going to restate its financial results for the first three quarters of 2006 because the Company had failed to account for all of the re-purchased loans, and had failed to properly reduce the value of the loans repurchased. The Company was forced to admit that its financial statements could no longer be relied upon. As a result of this unexpected news, New Century shares slumped to a 52-week low, plunging $10.92, to close at $9.42 per share a decline of over 36% on extraordinary volume of over 25 million shares. However, before that announcement, Company insiders sold more than $26 million worth of their personal holdings during the Class Period.
