The Complaint brought forth claims for violations of the Securities Exchange Act of 1934 against Home Loan Servicing Solutions, Inc. (“HLSS” 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 HLSS common stock during the Class Period.
HLSS is part of a larger hub-and-spoke complex of companies related to Ocwen Financial Corporation (“Ocwen”). HLSS acquires mortgage servicing assets and engages Ocwen to service the mortgage loans underlying such assets. HLSS would pay Ocwen a fee to service the mortgages. Defendants repeatedly assured the public that the Company maintained substantial internal and financial controls, including recusal policies over related party transactions that were purportedly designed to protect the integrity of HLSS’s corporate practices. In so doing, Defendants represented to the market that transactions between HLSS and Ocwen were at arm’s-length and free of self-dealing.
Specifically, the Complaint alleged that the Defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company’s business was actually dependent on Ocwen and Ocwen conducting its business legally; (2) HSSI faced material risks and uncertainties due to the systemic internal control weaknesses at Ocwen; and (3) Ocwen was under investigation for violating applicable federal and state regulations and laws, including among other things, the New York Department of Financial Services’ and the state of California’s investigation of Ocwen. Beginning in October 2014, a series of disclosures exposed illicit practices running rampant throughout HLSS and the rest of the Ocwen complex. These disclosures resulted in massive declines in the Company’s stock price, analyst and credit rating downgrades, and regulatory actions.
On April 28, 2015, the Court entered an order appointing Saxena White P.A. as Lead Counsel. Then on October 5, 2015, the SEC issued a Cease and Desist Order against HLSS. The SEC Order was the culmination of an investigation that included multiple allegations regarding HLSS. On November 9, 2015, Lead Plaintiffs filed an Amended Consolidated Complaint which included additional allegations and references to the SEC Order.
After the Defendants’ motions to dismiss were fully briefed, the Court issued an order on June 6, 2016 denying in part Defendants’ motions finding that Lead Plaintiffs had properly pled claims concerning related party transactions.
Throughout discovery, Lead Counsel reviewed over 750,000 documents produced by Defendants and third parties. On March 8, 2017, the Parties participated in a day-long mediation. In the months that followed, the parties continued to conduct numerous telephonic discussions with the mediator, and on May 11, 2016, as a result of these discussions, Saxena White successfully negotiated an agreement to settle the claims for $6,000,000 for the benefit of the Class. The settlement agreement was executed on June 9, 2017. On June 14, 2017, the Court preliminarily approved the settlement, and then on November 17, 2017, entered final judgment finding the settlement to be fair, adequate and reasonable in all respects.