This is a securities fraud class action against The Mills Corporation on behalf of investors.
The class action lawsuit alleges that Mills and various of its officers, throughout the class period, overstated the Mills' net income and funds from operations in violation of Generally Accepted the Exchange Accounting Principles ('GAAP'), and misrepresented the adequacy and quality of its internal controls over financial reporting.
The complaint alleges that on or around October 31, 2005, Mills announced that its third quarter results would be delayed because the company needed additional time to review its accounting, and further announced Mills expected results to be lower than initially anticipated. On January 6, 2006, Mills announced that that:
(1) it needed to restate its financial results for fiscal year 2000 through the third quarter of 2005;
(2) that it had internal control weaknesses and deficiencies in regards to its accounting practices;
(3) that it would write off ten predevelopment business projects, constituting a $71 million charge;
(4) that 17 executives and/or officers were either terminated or retired;
(5) that a $4.1 million dollar loan would not be repaid and that Mills had facts available in 2000 sufficient to make this determination, but that the $4.1 million loan had been improperly reported in all of Mills' financials from 2000 through the third quarter of 2005;
(6) that Mills was in default of certain provisions of its line of credit and other project-related loans;
(7) that Mills had entered into a new $150 million credit line to provide short term liquidity; and
(8) disclosed that investors should no longer rely on its financial statements for the period from fiscal year 2000 through the third quarter of 2005.
Thereafter, on January 12, 2006, Mills announced that the Securities and Exchange Commission (the "SEC") had launched an informal investigation into its earlier announcement that a restatement of its financials for nearly five years would be required. In response to the October 31, 2005 announcement, the price of Mills common stock dropped from a closing price of $53.50 on October 31, 2005 to close at $45.68 per share on November 1, 2005 -- a dramatic drop of nearly 15%.
As a result of the subsequent January 6, 2006 announcement, the price of Mills common stock further dropped from a close of $42.23 on January 6, 2006 to a close of $41.05 on January 10, 2006, constituting an additional decline of 3%.
Name (Stock Symbol)
Mills Corporation, The
The Mills Corporation was a publicly traded real estate investment trust that owned shopping malls. It was acquired on April 3, 2007 by an investment group comprised of Simon Property Group and Farallon Capital Management.
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