Robbins Arroyo LLP: Walter Investment Management Corp. (WAC) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Walter Investment Management Corp. (NYSE: WAC) in the U.S. District Court for the Middle District of Florida. The complaint is brought on behalf of all purchasers of Walter securities between May 3, 2016 and March 13, 2017, for alleged violations of the Securities Exchange Act of 1934 by Walter’s officers and directors. Walter operates as an independent servicer and originator of mortgage loans, and a servicer of reverse mortgage loans in the United States.
Walter Accused of Failing to Implement Adequate Internal Controls
According to the complaint, Walter issued a series of filings with the U.S. Securities and Exchange Commission (“SEC”) containing false information about the company’s financial position. On February 29, 2016, Walter submitted its Form 10-K in which the company articulated reassuring expectations for its recent rebranding and consolidation of Ditech Financial. Specifically, Walter stated that the rebranding would improve the company’s recapture performance, and in a separate SEC filing, acknowledged that Ditech’s reorganization was intended to improve efficiencies and profitability of its reverse mortgage business. The complaint claims that Walter’s statements were false and misleading because Walter omitted pertinent facts concerning its financial condition, including that: Ditech had a material weakness in its internal control over operational processes, Walter therefore had deficient internal controls over financial reporting, and Walter was involved in fraudulent practices that violated the False Claims Act.
Walter’s true financial condition was revealed on March 14, 2017, in the company’s Form 10-K for the fiscal year ended December 31, 2016, in which Walter concluded there was “a material weakness in internal controls over financial reporting related to operational processes associated with Ditech Financial default servicing activities.” The report further detailed that Walter “did not design and maintain effective controls” in connection with its business activities including identifying and resolving foreclosure tax liens in a timely manner and processing loans in bankruptcy status. Because of Walter’s poor internal controls, the company made several adjustments to reserves in the fourth quarter of 2016 totaling $16.3 million. Additionally, Walter revealed that one of its three operating segments, Reverse Mortgage Solutions, received subpoenas on June 16, 2016 and January 12, 2017, from the Office of Inspector General of the U.S. Department of Housing and Urban Development for potential violations of the False Claims Act. On this news, Walter’s stock fell $1.05 per share, or 38.89%, to close at $1.65 per share on March 14, 2017.
Walter Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Leonid Kandinov at (800) 350-6003, or you can complete the form below and we will contact you directly.
Send This Post