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KLAFTER OLSEN & LESSER LLP ANNOUNCES THAT IT HAS FILED A CLASS ACTION LAWSUIT AGAINST COLONIAL BANCGROUP INC.
February 9, 2009 – Klafter Olsen & Lesser LLP has filed a class action lawsuit against Colonial BancGroup, Inc. (“Colonial” or the “Company”) (NYSE: CNB) and certain of its officers in the U.S. District Court for the Middle District of Alabama on behalf of all persons or entities who purchased the securities Colonial from December 2, 2008 through January 27, 2009, inclusive (the “Class Period”). As described below, if you purchased Colonial’s publicly traded securities during the Class Period, you have 60 days from today to move the Court to be appointed a Lead Plaintiff.
Defendant Colonial is a bank holding company whose primary business is commercial and consumer banking. The Complaint alleges that the Defendants violated the federal securities laws by disseminating materially false and misleading statements contained in a press release and a related filing with the Securities and Exchange Commission concerning the Company’s participation in the Troubled Asset Relief Program (“TARP”). Specifically, during the trading day on December 2, 2008, Colonial issued a press release announcing that it had received TARP funding approval for an injection of $550 million. The press release also detailed the purported terms of the TARP funding with the United States Treasury Department including that the government would received preferred stock as well as warrants to purchase Colonial common stock. In response to that announcement Colonial’s stock price surged over 50 percent from its $2 per share close on December 1, 2008 to close at $3.08 per share on December 2, 2008.
Remarkably, the Defendants did not disclose that Colonial would be required to raise additional outside capital of $300 million before it could receive the $550 million in TARP funding. Defendants belatedly disclosed that critical fact after the markets closed on January 27, 2009. In response to that announcement, Colonial’s stock price plunged from its close of $1.58 on January 27, 2009 to $0.85 the next trading day -- a 46 % drop -- on extraordinary volume exceeding 26 million shares.
If you purchased Colonial securities during the Class Period and sustained losses, please contact Klafter Olsen & Lesser LLP at www.klafterolsen.com or call us at 202/261-3553 for a more thorough explanation of the claims that have been asserted against Colonial. Klafter Olsen & Lesser 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.
Contact:
Kurt B. Olsen
KLAFTER OLSEN & LESSER LLP
1250 Connecticut Ave. N.W., Suite 200
Washington, DC 20036
202/261-3553
Link to Complaint.
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