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In re New York Community of Bancorp

June 29, 2007

IN RE: NEW YORK COMMUNITY OF BANCORP, INC., SECURITIES LITIGATION


The opinion of the court was delivered by: Spatt, District Judge

MEMORANDUM DECISION AND ORDER APPEARANCES

Currently before the Court is (1) a motion by the Lead Plaintiff, Metzler Investment GmbH (the "Lead Plaintiff"or "Metzler"), for reconsideration of this Court's September 18, 2006 Decision granting the Defendants' motion to dismiss the Consolidated and Amended Class Action Complaint; (2) a motion by the Lead Plaintiff to add co-lead counsel; and (3) a motion by the Defendants to strike the Lead Plaintiff's reply papers.

I. BACKGROUND

The background of this case is set forth in the Court's Memorandum of Decision and Order of September 18, 2006. In re N.Y. Cmty. Bancorp, Inc. Sec. Litig., 448 F. Supp. 2d 466 (E.D.N.Y. 2006). Familiarity with that decision is assumed. The relevant facts are repeated for clarity.

By order dated August 9, 2005 ("Consolidation Order"), United States District Judge Denis R. Hurley consolidated eleven related purported securities class actions commenced on behalf of investors who purchased or acquired stock of New York Community Bancorp. ("NYCB"). In addition, the Court appointed Metzler and Bernard Drucker as Lead Plaintiffs and their counsel Milberg Weiss Bershad & Schulman LLP ("Milberg Weiss") as lead counsel. On October 6, 2005, the Lead Plaintiffs filed a Consolidated and Amended Class Action Complaint (the "Amended Complaint").

In this consolidated class action the Plaintiffs claimed that the Defendants NYCB, Joseph R. Ficalora, Joseph L. Mancino, Michael F. Manzulli, Michael Puorro, Robert Wann, Anthony E. Burke, James J. O'Donovan, and Thomas R. Cangemi (collectively the "Defendants"), violated federal securities laws by making materially false and misleading statements concerning NYCB's investment practices; its exposure to interest rate risk; the composition of its investment portfolio; and its ability to sustain growth through its multi-family mortgage lending business.

On February 24, 2006, the Defendants moved to dismiss the Amended Complaint. On March 10, 2006, the case was reassigned to this Court. On September 18, 2006, this Court dismissed the Amended Complaint in its entirety for failure to state a claim and directed the Clerk's Office to close this case.

In its Decision, this Court determined that the alleged misstatements set forth in the Amended Complaint constituted generalizations regarding integrity, fiscal discipline, and risk management that amounted to no more than inactionable puffery. The Court found that no reasonable investor would have relied on such statements if they had examined the numerous disclosures NYCB made regarding the magnitude of its investment in mortgage-backed securities and the risk associated with such investments.

The Court further determined that an examination of the public reports prior to and during the Class Period revealed that NYCB consistently disclosed the company's "leveraged growth" strategy of investing in mortgage-backed securities. The Court noted that the totality of the public disclosures from NYCB portrayed an overall commitment to deleverage over the long-term, while taking advantage of opportunities for leveraged growth when and if they were presented. The Court further determined that the Plaintiffs did not allege that NYCB ever misstated any historical fact or even one item of financial data. According to the Court, NYCB's investment activities were completely transparent, fully disclosed, and readily available for any investor that made even the most cursory inquiry.

Accordingly, the Court found that the Plaintiffs failed to allege any material misrepresentation or omission, an element common to all of the Plaintiffs' claims. In fact, the Court determined that the disclosures made by NYCB prior to and during the Class Period in its quarterly and annual reports, as well as the January 2004 Offering Prospectus, showed a company that was transparent. The Court noted that any investor could have readily seen that NYCB was heavily leveraged, and deeply invested in risky mortgage-backed securities. Moreover, the risks associated with such investment activity were adequately disclosed to investors and shareholders.

Accordingly, the Court determined that the Plaintiffs failed to allege any actionable material misstatement or omission. The Court dismissed the Amended Complaint and closed the case.

Following the dismissal of the Amended Complaint, the Lead Plaintiffs moved to appoint new lead co-counsel, contending that lead counsel, Milberg Weiss, and two former partners had been indicted. The Lead Plaintiffs also moved for reconsideration of this Court's September 18, 2006 Decision. However, on October 26, 2006, Lead Plaintiff Bernard Drucker withdrew his motion to appoint new lead co-counsel and, additionally, withdrew his motion for reconsideration. As a result, only the Lead Plaintiff Metzler's motions remain pending before this Court.

In support of its motion for reconsideration, the Lead Plaintiff argues that it should be granted leave to amend the Amended Complaint. The Lead Plaintiff contends that in its September 18, 2006 Decision, this Court should have granted leave to amend the Amended Complaint. The Lead Plaintiff contends that it should now be permitted to "recast the Complaint" and "demonstrate that Defendants deliberately deceived investors." In fact, the Lead Plaintiff contends that it "can recast the Complaint to make clearer the materiality of Defendants' misrepresentations and omissions." The Lead Plaintiff further claims that, if given the opportunity, it can "plead facts supporting a strong inference that Defendants acted with scienter." Although the Lead Plaintiff purports to move for reconsideration pursuant to Fed. R. Civ. P. 59(e) and 60(b), the Lead Plaintiff fails to specify the subsection of Rule 60(b) upon which it relies.

In opposition, the Defendants contend that the Lead Plaintiff's motion for reconsideration is frivolous and presents no grounds for reconsideration. Following the filing of the Lead Plaintiff's reply papers, including a supporting affidavit, the Defendants moved to strike the reply papers as untimely and in violation of Local ...


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