A federal judge in Los Angeles has dismissed a shareholder class action against the former officers and directors of Downey Financial Corp., a mortgage lender that filed for Chapter 7 liquidation in November.
“It’s the first instance where a court has dismissed with prejudice a complaint filed against the former management of a financial institution that’s been taken over by the FDIC,” said Dan Marmalefsky, a partner in the Los Angeles office of Morrison & Foerster, referring to the Federal Deposit Insurance Corp.’s takeover of ailing financial institutions during the ongoing mortgage crisis.
