Robbins Umeda LLP Announces an Investigation of Flagstar Bancorp, Inc.
Robbins Umeda LLP is investigating possible breaches of fiduciary duty and other violations of the law by certain officers and directors at Flagstar Bancorp, Inc. (NYSE: FBC). Concerned shareholders who would like more information about their rights and potential remedies can complete the form below and we will contact you directly. You can also contact attorney Gregory E. Del Gaizo at (800) 350-6003.
Robbins Umeda LLP’s investigation focuses on whether members of the board of directors at Flagstar breached their fiduciary duties to shareholders and maintained woefully inadequate controls to the detriment of the company and investors.
In particular, the firm is investigating allegations that Flagstar violated the False Claims Act when it improperly endorsed federally-insured mortgage loans that eventually defaulted and falsely certified its loan underwriting practices to federal housing authorities. On February 24, 2012, the U.S. Department of Justice filed a complaint against Flagstar, which alleges that Flagstar utilized under-qualified underwriting assistants to approve thousands of residential home mortgage loans for Federal Housing Administration insurance. The complaint also alleges that Flagstar improperly set daily quotas for the underwriting assistants and paid them substantial incentive awards for exceeding their quotas. While engaging in this scheme, the officers and directors of the company not only exposed Flagstar to significant liability, but represented to the investing public that Flagstar was operating in compliance with all applicable laws and regulations.
As a result of these activities, Flagstar has increasingly become the focus of costly public and legal scrutiny. Under the terms of a settlement, reached on February 24, 2012, Flagstar must pay $15 million to the Department of Justice within thirty days, and pay up to an additional $117.8 million if it meets certain criteria, such as generating positive income over a sustained period to realize its deferred-tax assets. Flagstar must also fully repay the $266.7 million the government invested in the bank as part of the Troubled Asset Relief Program.
Robbins Umeda LLP highlights that Flagstar shareholders have the option to file a derivative action to hold those officers and directors accountable for damaging the company. Remedies commonly sought in derivative actions include corporate governance reforms designed to prevent future misconduct, removal of officers or directors whose misconduct injured the corporation, and monetary payments in the form of damages and disgorgement of ill-gotten gains.
Robbins Umeda LLP is a nationally recognized leader in securities litigation and shareholder rights law. The firm represents individual and institutional investors in shareholder derivative and securities class action lawsuits, and has helped its clients realize more than $1 billion of value for themselves and the companies in which they have invested.