Mr Cooper Group Inc (COOP)

[zeus_0100]

Again, nothing was hidden, it's value was just not understood by the shareholders, and it was there for them to see.

https://www.law360.com/articles/112655/kmart-shareholder-class-action-booted

Plaintiffs allege that the defendants represented that the fair market value of Kmart's real estate was $10 million when in reality it was $9 billion to $18 billion. U.S. District Judge Lewis Kaplan in New York wrote in a Tuesday opinion, "This rather dramatic assertion is not borne out by plaintiffs' well-pleaded factual allegations."

Kmart Shareholder Class Action Booted
By Samuel Howard

Law360, New York (July 22, 2009, 12:32 PM ET) -- A federal judge has tossed a putative class action by Kmart Corp. shareholders for failing to back up allegations that top officers of the big box retailer — now part of Sears Holding Corp. — concealed the true value of the company’s real estate assets, suppressing the company’s stock price.

On Tuesday, Judge Lewis A. Kaplan of the U.S. District Court for the Southern District of New York dashed investors’ claims that Sears chairman Edward S. Lampert and former Kmart CEO Julian Day drastically undervalued Kmart’s real estate assets, causing shareholders to sell stock at basement prices in 2003 and 2004.

Piling “one unsubstantiated assumption upon another” the consolidated class action complaint failed to support claims that the defendants made false and misleading statements about the worth of Kmart’s real estate and otherwise fell short of meeting the heightened pleading standards for securities fraud, Judge Kaplan said.

The court discounted the lawsuit’s central allegation that the defendants told investors Kmart’s reorganized real estate was worth roughly $10 million while the assets were really valued at $9 to $18 billion. The claim, the court said, was founded more on the investors’ incomprehension than the defendants’ misconduct.

While Kmart had stated in 2003 that it had reduced its property, plant and equipment, valued at $4.62 billion, to reflect the write-off of the reorganized company’s previous equity and “negative good will to long-lived assets,” the adjusted net valuation of $10 million did not constitute a misrepresentation, according to the opinion.

“After reading these disclosures, no rational investor reasonably could have concluded that $10 million represented the fair market value of the company’s real estate. To the contrary, any literate person would have understood that Kmart had stated that the fair market value of its property, plant and equipment was $4.62 billion,” Judge Kaplan said.

Even if the complaint had sufficiently alleged actionable misstatement regarding the value of the Kmart real estate, the case was doomed as investors failed to establish that Lampert and Day deliberately acted to defraud investors.

Plaintiffs claimed that Lampert was motivated to conceal Kmart’s true real estate value in order to obtain control of Kmart at a bargain price and that Day did so to reap massive profits by depressing the value of new common stock issued during the retailers’ restructuring.

The court, however, pointed out that the defendants had little reason as major investors to tamp down the Kmart stock price and would have greater interest in enhancing the value of the shares post bankruptcy by disclosing the full value of the real estate assets.

Paul Vizcarrondo, counsel for Sears and a partner at Wachtell Lipton Rosen & Katz, welcomed the decision and said it reflected the appropriate pleading standards.

"We are obviously pleased with the outcome and believe the decision is entirely correct," Vizcarrondo said.

Filed in 2006, the suit alleged the company and the two men continued to conceal the true value of the company until Kmart sold a fraction of its leasehold and fee interests — a move that came more than a year after the company left bankruptcy protection. By then, though, the plaintiffs had sold their shares.

Representatives for the plaintiffs and Kmart alike could not be reached for comment Wednesday.

The plaintiffs are represented in this matter by Grant & Eisenhofer PA, Coughlin Stoia Geller Rudman & Robbins LLP and Gardy & Notis LLP.

Sears is represented by Wachtell Lipton Rosen & Katz.

The case is In re: Sears Holdings Corporation Securities Litigation, case number 1:06-cv-04053, in the U.S. District Court for the Southern District of New York.