Stull, Stull & Brody Announces Class Action against Doral Financial Corporation

27 May 2005

Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Southern District of New York, on behalf of all persons who purchased the publicly traded securities of Doral Financial Corporation ("Doral") (NYSE:DRL) between May 15, 2000 and April 19, 2005, inclusive (the "Class Period") against Doral and certain of its officers and/or directors.

The Doral complaint alleges that during the Class Period, defendants, Doral Financial Corp., Salomon Levis, Richard Melendez and Richard F. Bonini made materially false and misleading statements regarding the Company's business and prospects. Defendants failed to disclose to the investing public that the Company was improperly overvaluing its floating rate interest only ("IO") Strips, an important part of its mortgage portfolio, and thereby substantially inflating its financial results during the Class Period. As a result, during the Class Period, the Company's net income and net gain on mortgage loan sales were materially overstated, the Company's return on equity and capital were materially overstated, and the Company's reported net capital was materially overstated. Defendants also failed to disclose to investors that the Company's risk management, hedging strategies and internal controls were deficient and would not protect the value of Doral's portfolio in a rising rate environment, despite repeated reassurances to the contrary. On April 19, 2005, Doral announced that it was restating its financial results for 2000 through 2004. According to Doral, the restatements are necessary to correct the accounting treatment for valuing Doral's IO Strip Portfolio. Doral admitted that eventually it will be required to take a charge of between $290 million and $435 million. As a result of these false statements, Doral's stock price traded at inflated levels during the Class Period, increasing to as high as $49.45 per share on January 18, 2005. The Company sold $740 million worth of notes and $345 million worth of preferred stock during the Class Period. However, after the truth was revealed in Doral's press release on April 19, 2005, the Company's shares fell to below $16 per share.

If you acquired Doral securities between May 15, 2000 and April 19, 2005, you may, no later than June 20, 2005, request the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Stull, Stull & Brody, or other counsel of your choice, to serve as your counsel in this action. Stull, Stull & Brody has litigated many class actions for violations of securities laws in federal courts over the past 30 years and has obtained court approval of substantial settlements on numerous occasions. Stull, Stull & Brody maintains offices in both New York and Los Angeles.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Tzivia Brody, Esq. at Stull, Stull & Brody by e-mail at SSBNY@aol.com, or by calling toll-free 1-800-337-4983, or by fax at 212/490-2022, or by writing to Stull, Stull & Brody, 6 East 45th Street, New York, NY 10017. You can also visit our website at www.ssbny.com.

Source: Business Wire

All trademarks and copyrighted information contained herein are the property of their respective owners.