Altisource Asset Management Corporation (NYSE: AAMC)

DEFENDANT NAME: Altisource Asset Management Corporation
STOCK SYMBOL: NYSE: AAMC
CASE NUMBER: 17-2471
CASE NAME:
COURT: U.S. Court of Appeals for the Third Circuit
PRACTICE AREA: Investor Fraud
STATUS: Active
CLASS PERIOD: Apr. 19, 2013 - Jan. 12, 2015
LEAD PLAINTIFF DEADLINE:
DATE FILED: 01/16/15
COURT LOCATION: Philadelphia, PA
RELATED DOCUMENTS:
CONTACT:

Hagens Berman was appointed Lead Counsel on May 12, 2015, in this case on behalf of investors in vested in Alitsource Asset Management Corporation (“AAMC”). Lead Plaintiff is an institutional investor.  It is a government-defined benefit pension plan that provides retirement benefits to qualified members of the City and County of Denver, Colorado, the Denver Health and Hospital Authority, and the Denver Employees Retirement Plan itself.

The case is brought on behalf of all persons who, between April 19, 2013, and January 12, 2015, inclusive, (the “Class Period”) suffered losses as a result of their purchase of shares of AAMC common stock (the “Class”). Defendant William C. Erbey is the dominant corporate figurehead whose conduct is at issue.  Also named as defendants are officers Kenneth Najour, Ashish Pandey, and Robin Lowe.

The Amended Complaint alleged AAMC was one of five publicly traded companies that Erbey established to take advantage of various opportunities related to servicing non-performing or sub-performing mortgage loans.  Ocwen Financial Corporation (“Ocwen”) was Erbey’s initial company in the mortgage servicing arena and had grown to become the fourth-largest mortgage servicer of mortgages in the United States.

A mortgage servicing company, particularly one such as Ocwen that specialized in subprime or nonperforming loans, must perform various services such as preparing the homes securing the mortgages for foreclosure, selling the foreclosed homes at auction, and a wide variety of other similar functions that are typically not handled by the loan servicer because of the potential for conflicts of interest that would provide incentives to the servicer to foreclose on mortgages rather than seeking to resolve nonperforming loans without foreclosing on homeowners.  State and federal regulators monitor this industry carefully to ensure that no such conflicts of interest exist that could be detrimental to the consumers subject to these mortgages.

But because these subsidiary services and businesses related to mortgage servicing can he highly profitable, Erbey sought to take advantage of the opportunities generated by Ocwen’s stature as the fourth-largest mortgage servicer by setting up four additional publicly-traded companies (the “Ocwen-Related Companies”) to take advantage of these opportunities that Ocwen could not, due to regulatory concerns over potential conflicts of interest.

The Amended Complaint alleges that AAMC misrepresented or outright concealed its relationship with these companies and the extent to which the interconnected entities engaged in conflicted transactions with themselves. On December 22, 2014, AAMC announced that as part of the terms of a settlement that Ocwen had reached with the New York Department of Financial Services (the "New York DFS"), Erbey would step down as chairman of AAMC's board and from his positions at each of the related companies. As part of its investigation, the New York DFS indicated that it had uncovered “serious conflicts of interest between the Related Companies.” This triggered a landslide in AAMC’s share price – it declined over 23% per share in late 2014 before tumbling another 33% in January 2015 on news that the California Department of Business Oversight was seeking to revoke Ocwen’s license to operate in the state.

The Firm filed an Amended Complaint on June 19, 2015 alleging that during the Class Period defendants misrepresented and/or concealed the Company's relationship with, and conflicted transactions with, a group of related companies, including Ocwen Financial Corporation, all of which were founded by Defendant William Erbey.  Defendants filed motions to dismiss and a request for judicial notice on July 20, 2015 and in response Hagens Berman moved to strike portions of the request for judicial notice and opposed the motion to dismiss.  In April 2017, the district court granted defendants’ motion.

The case is now on appeal before the Third Circuit Court of Appeals. The appeal is fully briefed and oral argument was held on May 24, 2018.


Hagens Berman purchases advertisements on search engines, social media sites and other websites. Transmission of the information contained or available through this website is not intended to create, and receipt does not constitute, an attorney-client relationship. If you seek legal advice or representation by Hagens Berman, you must first enter a formal agreement. All information contained in any transmission is confidential and Hagens Berman agrees to protect information against unauthorized use, publication or disclosure. This site is regulated by the Washington Rules of Professional Conduct.

Back to all cases

Case videos

Case Gallery

Case Timeline

12/31/69:

Related News