Industry News

Shareholders sue Washington Mutual

Complaint stems from reduction in earnings guidance

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A lawsuit on behalf of all purchasers of Washington Mutual stock has been filed against the largest U.S. savings and loan. The complaint charges WaMu with violations of the Securities and Exchange Act of 1934. Specifically, it alleges the company failed to disclose and also misrepresented certain facts the lawsuit alleges were known to defendants or disregarded by them. The complaint alleges the company knew or disregarded the fact that its solid earnings growth was linked to the extraordinary mortgage volumes fueled by low interest rates and that the company knew or disregarded that its earnings growth could not be sustained and that the company's business strategy was flawed, regardless of the company's efforts to reduce operating costs and streamline and improve operations. The complaint further alleges that as a consequence of those two situations, WaMu lacked a reasonable basis for its positive statements about the company and its earnings projections. In a June statement, WaMu ...