COLCHESTER, Conn., Feb. 9, 2007 (PRIME NEWSWIRE) -- Today, Scott+Scott, LLP, filed a class action against New Century Financial Corp. ("New Century" or the "Company") (NYSE:NEW) and certain officers and directors in the U.S. District Court for the Central District of California. The action is on behalf of New Century common stock purchasers during the period April 7, 2006 through February 7, 2007, inclusive (the "Class Period"), for violations of the Securities Exchange Act of 1934. The complaint alleges that defendants made false and misleading statements and material omissions regarding the Company's business and operations and that, as a result, the price of the Company's securities was inflated during the Class Period, thereby harming investors.
If you purchased New Century stock during the Class Period and wish to serve as a lead plaintiff in the action, you must move the Court no later than 60 days from today's date. Any member of the investor class may move the Court to serve as lead plaintiff through counsel of its choice, or may choose to do nothing and remain an absent class member. If you wish to discuss this action or have questions concerning this notice or your rights, please contact Scott+Scott (scottlaw@scott-scott.com, 800/404-7770, 860/537-5537) or visit the Scott+Scott website, www.scott-scott.com, for more information. There is no cost or fee to you.
According to the complaint, during the Class Period, defendants made false and misleading statements regarding the Company's quarterly financial results and profits, in active concealment of the wayward nature of their internal controls over accounting. Specifically, plaintiff alleges that defendants actively concealed violations of "generally accepted accounting principles" ("GAAP") and SEC rules in order to conceal the true dimensions and adverse impact of rapidly growing early-payment defaults and loan repurchases on the Company's financial results.
According to the allegations, rather than disclose the truth of these matters, defendants were upbeat in the assessment of the Company's performance, stating that the Company was "on track" to meet profit margin targets, that the Company's quarterly results were "particularly impressive," and that "operating results were solid." The truth of these matters was revealed on February 7, 2007, upon defendants' shocking announcement that the Company would restate its consolidated financial results for the quarters ended March 31, June 30 and September 30, 2006 to correct violations of GAAP regarding the Company's allowance for loan repurchase losses.
Defendants also admitted that they failed to properly consider, or to disclose to the investment community, for each of the first three quarters of 2006, the growing volume of repurchase claims outstanding that resulted from the increasing pace of repurchase requests that occurred in 2006.
The corrective nature of the Company's shocking press release of February 7, 2007 was immediate and overwhelming in its effect. On February 8, 2007, New Century's stock price plunged $10.92 or 36.2%, closing at $19.24 per share, on astounding and unprecedented volume of 25.2 million shares, a loss of over $605 million in total market value.
The plaintiff is represented by Scott+Scott, a firm with significant experience in prosecuting investor class actions. The firm dedicates itself to client communication and satisfaction and currently is litigating major securities, antitrust and employee retirement plan actions throughout the United States. The firm represents pension funds, charities, foundations, individuals and other entities worldwide.
More information on this and other class actions can be found on the Class Action Newsline at www.primenewswire.com/ca/