A lawsuit has been filed in the U.S. District Court for the Central District of California against certain officers and directors of Criimi Mae, Inc. (NASDAQ:CMM), a commercial mortgage company, specializing in government insured and guaranteed mortgage investments, on behalf of purchasers of the company's common stock between February 20, 1998 and October 5, 1998 to recover damages caused by defendants' violations of the Securities Exchange Act of 1934.
The complaint alleges that defendants issued a series of materially false and misleading statements concerning the company's financial health, assets, earnings and capital position in order to artificially inflate the price of the company's stock. Specifically, the complaint alleges that defendants misrepresented that the company was strong and largely insulated from market fluctuations, and would meet analysts' earnings projections, sustain dividend levels, and meet all collateral calls. Despite these representations, 10 days later, the company shocked the market by announcing that it had filed for bankruptcy protection primarily due to its inability to meet collateral calls.

Update

On March 3, 2000, the court granted defendants' motion to dismiss with prejudice. On July 17, 2000 plaintiffs' counsel waived all claims against Prudential and Arthur Andersen.