The complaint charges that Wilmington and certain of its officers and directors violated federal securities laws by issuing materially false statements.
Specifically, defendants failed to disclose: (i) that Wilmington improperly delayed recording loan charge offs; (ii) that the company’s reported income and asset quality were materially overstated due to defendants’ material understatement of Wilmington’s loan loss provisions, loan loss reserves and income tax expense; (iii) that as a result, Wilmington’s financial statements were materially false; (iv) that the company’s internal controls were materially deficient; and (v) that Wilmington was engaged in unsound banking practices.
On 1 November 2010, Wilmington announced it lost $365.3m in the third quarter of 2010, primarily as a result of a $281.5m charge to ‘reflect the increased risk in our loan portfolio’ and a $100.7m income tax charge due to continued losses and uncertainty about the reliability of Wilmington’s deferred tax asset and deterioration in its loan portfolio.
