Downey Financial Shareholder Suit Booted

Law360, New York (August 25, 2009, 5:27 PM EDT) -- Former executives of bankrupt Downey Financial Corp. have won their bid to dismiss a shareholder class action that accused them of concealing the bank's investment in mortgage-backed securities, an investment that devastated its credit and ultimately led to its collapse.

Judge John Walter of the U.S. District Court for the Central District of California issued an order in chambers Friday granting the individual defendants' motion to toss the second amended consolidated complaint.

The claims against Downey itself have been stayed since the lender filed for Chapter...
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