The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against Altisource Portfolio Solutions, S.A. (“Altisource,” or the “Company”), and certain of its senior executives. The Complaint alleged that Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects on behalf of all persons or entities that purchased or otherwise acquired Altisource common stock during the Class Period.
Defendant Altisource provides back-office mortgage processing and servicing technology to mortgage loan servicing providers. Its primary client was its former parent, Related Party, Ocwen Financial Corporation (“Ocwen”). Throughout the Class Period, Defendants emphasized to the market that Altisource’s revenues from its related party transactions with Ocwen—Altisource’s lifeblood—were sustainable, free of self-dealing or other conflicts, and subject to strict internal controls. These assurances extended to related party transactions and potential conflicts of interests involving Defendant Erbey, the founder, majority shareholder, and Chairman of both companies until government regulators recently forced him to resign. In addition, the action alleged that Defendants touted the superior quality and regulatory compliance of Altisource’s mortgage servicing technologies. Defendants repeatedly emphasized that Altisource’s REALServicing platform, the technology backbone of Ocwen’s loan servicing business, was highly scalable and fully capable of servicing loans in an efficient, effective, and legally compliant manner.
Specifically, the Complaint alleged that in truth–and in stark contrast to Defendants’ Class Period statements to Altisource investors–Altisource and Ocwen, at Defendant Erbey’s direction, engaged in conflicted related party transactions designed to improperly funnel money from innocent homeowners to Altisource and Erbey. Every aspect of this fraud has now been admitted by Ocwen. When the truth was finally revealed, Altisource’s common stock had lost a total of over $1 billion in market capitalization.
On January 30, 2015, Lead Plaintiff filed the Amended Complaint. Defendants filed their motions to dismiss the Amended Complaint on March 23, 2015, Lead Plaintiff filed their Opposition to Defendants’ motions on May 14, 2015, and Defendants filed their replies in June 2015. On December 22, 2015, the Court denied the Altisource Defendants’ motion to dismiss in part. The Altisource Defendants moved for reconsideration of the Court’s Motion to Dismiss Order on January 22, 2016. The Court denied Defendants’ motion on March 4, 2016.
On December 28, 2016, Lead Plaintiff filed a Fourth Amended Complaint based on fact development through discovery. Then, on January 19, 2017, the Parties filed a Notice of Settlement informing the Court that they had agreed to settle all claims asserted against Defendants. On February 8, 2017, Plaintiffs filed a motion for preliminary approval of the settlement, along with the Stipulation of Settlement and other exhibits, which informed investors that the Parties agreed to settle all claims for $32,000,000.
On February 10, 2017, the Court preliminarily approval of the settlement, and on May 30, 2017, entered a final judgment finding the settlement to be fair, reasonable and adequate in all respects.