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In re American Home Mortgage Securities Litigation
(United States District Court for the Eastern District of New York)
Securities fraud action filed on behalf of investors of now-bankrupt American Home Mortgage
Investment Corp. (“American Home” or the “Company”). On March 19, 2008, the Honorable Thomas C.
Platt, United States District Judge for the Eastern District of New York, appointed the Teachers’
Retirement System of Oklahoma as Co-Lead Plaintiff and BLB&G as Co-Lead Counsel for the Class. On June 3, 2008, BLB&G filed an Amended Complaint. Click
here to view the Amended Complaint.
The Amended Complaint alleges that, contrary to its public posture as a prime mortgage lender,
American Home abandoned its underwriting guidelines to drive growth by issuing high-risk loans
to borrowers with poor credit. Indeed, the Company operated with a goal of providing a loan to
"virtually any borrower." Moreover, mortgage loans that American Home sold on the secondary market
and which the Company was then forced to repurchase due to their low quality were held by the Company
for full value in its investment portfolio, rather than being sold at a loss or marked down. By violating
its underwriting guidelines, the Company fueled dramatic growth to become one of the ten largest mortgage
lenders in the U.S. The Company's loans, however, served as collateral for the credit facilities
on which it was dependent. On July 27, 2007, after the close of the market, American
Home issued a press release disclosing major write-downs of the Company’s loan and mortgage
security portfolio, which had in turn caused significant margin calls with respect to its credit
facilities. After the announcement, the New York Stock Exchange halted trading in American Home stock.
When trading resumed, shares plunged to $1.04 per share – a fraction of the $34.89 per share high the
stock had traded at during the class period.
The Amended Complaint states claims under the Securities Act of 1933 on behalf of investors who purchased
American Home stock pursuant to offerings conducted on August 9, 2005 and April 30, 2007, against the
Company's officers and directors, its auditor, Deloitte & Touche, and the underwriters of those offerings.
The Amended Complaint also states claims under the Securities Exchange Act of 1934 against American Home's
senior officers on behalf of investors who purchased American Home common or preferred shares during the
period from July 19, 2005 through and including August 6, 2007.
BLB&G continues to investigate the fraud at American Home.
If you wish to discuss the investigation, please contact us at 800-380-8496.
Firm partner Steven Singer and associates
Avi Josefson and
Matthew Moehlman are
responsible for prosecuting this action.
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