This is a securities class action lawsuit against National City and certain of its officers and directors charging them with violations of the Securities Exchange Act of 1934.
National City, a financial holding company, provided commercial and retail banking, mortgage financing and servicing, consumer finance, and asset management services in the United States.
The securities class action complaint alleges that NAtional City issued materially false and misleading statements regarding National City's business and financial results. As a result of its false statements, National City stock traded at artificially inflated prices during the Class Period, trading above $30 per share during much of the Class Period.
In October 2007, National City announced a big decline in earnings due to losses related to its mortgage business but assured the market about the dividend. Then, on January 2, 2008, National City announced a 49% reduction in its quarterly dividend to $0.21 per share from $0.41 per share. On this news, National City's stock dropped from $16.46 per share to as low as $15.45 per share, closing at $15.59 per share on January 2, 2008 on volume of over 12.7 million shares.
The true facts, which were known by defendants but concealed from the investing public during the Class Period, were as follows:
(a) the subprime mortgages on National City's books were a much bigger risk to National City's financial position than represented;
(b) National City was failing to adequately reserve for mortgage-related exposure, causing its balance sheet and financial results to be artificially inflated; and
(c) National City had no reasonable basis to make favorable predictions about National City's future dividend payments and future financial performance given the problems in the business.
As a result of National City's false statements and omissions, National City's stock traded at artificially inflated prices during the Class Period.
Name (Stock Symbol)
National City Corporation
National City Corporation was a bank.
National City Corporation was merged with and into The PNC Financial Services Group, Inc. on December 31, 2008.
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