Cases & Investigations

Centerline Holdings Co.


Berger Montague serves as co-lead counsel in this action.  The Complaint alleges that defendants issued a series of materially false and misleading statements about Centerline’s business model and financial condition, including statements concerning its portfolio of tax-exempt first mortgage bonds, which generated the majority of the Company’s revenues and supported the Company’s $1.68 per share annual dividend.  Defendants’ statements concealed from the investing public that defendants were in the midst of structuring a sale of the Company’s mortgage revenue bond portfolio to a third party.

On December 28, 2007, Centerline shocked the financial markets with a press release announcing that the Company had sold its “$2.8 billion tax-exempt affordable housing bond portfolio” to a third party and, in the process, transformed the Company’s business model to a pure asset management firm.  As a result of this transaction, the Company disclosed that it would be slashing its annual dividend from $1.68 per share to only $0.60 per share.  Even more shocking was the revelation that defendants had entered into a related party transaction with a company owned by certain of the defendants called The Related Companies, L.P. (“TRCLP”), whereby TRCLP agreed to provide Centerline $131 million in financing, in exchange for 12.2 million shares of newly-issued convertible preferred stock that will pay Company insiders an 11% dividend.

In reaction to this news, the price of Centerline stock plummeted from $10.27 per share on December 27, 2007, to close at $7.70 per share on December 28, 2007, to close at $7.70 per share on December 28, 2007, representing a 25% single-day decline, on unusually heavy trading volume of 4,152,688 shares.

A consolidated complaint was filed on behalf of the lead plaintiffs and the class on July 7, 2008

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