On August 1, 2002, Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit in the United States District Court for the Eastern District of Virginia, on behalf of purchasers of the securities of Capital One Financial Corporation ('Capital One' or the 'Company') [NYSE:COF] between January 15, 2002 and July 16, 2002, inclusive, (the 'Class Period') against defendants Capital One and certain of its officers and directors. If you wish to read a copy of the complaint, please click the Complaint link.
The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of the Company's securities. During the Class Period, Capital One announced that each quarter resulted in record revenues and earnings. Additionally, Capital One continually reaffirmed to investors that its impressive growth would not outpace its loan reserves, that the Company was well-capitalized and had attained an excellent credit performance in tandem with the 19 successive quarters of record earnings. However, the complaint alleges that these reports were materially false and misleading because Capital One omitted that, in breach of guidelines released on January 31, 2001, it had been under-reserving for subprime loans and was undergoing severe infrastructure inadequacies, regarding credit-risk assessment and information system, a result from the augmented growth in its business. On July 16, 2002, Capital One announced that it had agreed with regulators to enhance reserves by $247 million in the second quarter of 2002, as well as raise the Company's allowances for bad loans and further internal procedures to handle the sudden arrival of new clients. The price of Capital One common stock plunged following the announcement, declining 39% from a close of $50.60 per share on July 16, 2002, closing at $30.48 per share on July 17, 2002.
Additional cases were filed on behalf of investors. On September 17, 2002, motions were made to consolidate the various cases and appoint lead plaintiff and counsel. Wolf Haldenstein was appointed co-lead counsel. A consolidated complaint was filed. Defendants filed a motion to dismiss. On April 10, 2003, the Court granted the motion to dismiss. Plaintiffs appealed the Court's order to the United States Court of Appeals for the Fourth Circuit. The Court of Appeals has yet to rule on the Appeal.
Wolf Haldenstein has extensive experience in the prosecution of securities class actions and derivative litigation in state and federal trial and appellate courts across the country. The firm has approximately 60 attorneys in various practice areas; and offices in Chicago, New Jersey, New York City, San Diego, and West Palm Beach. The reputation and expertise of this firm in shareholder and other class litigation has been repeatedly recognized by the courts, which have appointed it to major positions in complex securities multi-district and consolidated litigation. If you wish to discuss this action or have any questions, please contact Wolf Haldenstein Adler Freeman & Herz LLP at 270 Madison Avenue, New York, New York 10016, or by telephone at (800) 575-0735 (Fred Taylor Isquith, Esq., Gregory M. Nespole, Esq., Michael Miske, Esq., George Peters, Esq., or Derek Behnke).