Doral Securities Litigation
www.DoralSecuritiesLitigation.com

FREQUENTLY ASKED QUESTIONS

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1. Why did I get a notice package?

The Notice was sent to you pursuant to an Order of a U.S. Federal Court because you or someone in your family or an investment account for which you serve as custodian may have purchased or otherwise acquired Doral common stock during the period from April 2, 2012, through and including May 1, 2014 (“Class Period”).

The Notice explains the class action lawsuit, the Settlement, Class Members’ legal rights in connection with the Settlement, what benefits are available, who is eligible for them, and how to get them.

The Court in charge of the Litigation is the United States District Court for the District of Puerto Rico, and the case is known as In re Doral Financial Corp. Sec. Litig., Civil Action No. 3:14-cv-01393-GAG. The case has been assigned to the Honorable Gustavo A. Gelpi. The individuals representing the Class are the “Co-Lead Plaintiffs,” and the individuals they sued and who have now settled are called the Settling Defendants.

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2. What is this lawsuit about?

On May 14, 2014, a putative class action was filed in the United States District Court for the District of Puerto Rico (the “Court”) alleging violations of federal securities laws. The Court has appointed the law firms of Robbins Geller Rudman & Dowd LLP and Glancy Prongay & Murray LLP as Lead Counsel. Jensine Andresen, Ken M. Nimmons and Mordechai Hakim are the Court-appointed Co-Lead Plaintiffs.

The Consolidated Amended Complaint for Violations of the Federal Securities Laws (the “Complaint”) filed in the Litigation alleged Settling Defendants made material misstatements and omissions regarding the financial health and status of Doral. Specifically, Co-Lead Plaintiffs alleged that Settling Defendants misrepresented Doral’s regulatory compliance and artificially inflated its capital levels by means of (i) systemic and widespread deficiencies in Doral’s procedures for determining appropriate loan reserves, which deficiencies were concealed during the Class Period; and (ii) concealing risks underlying a so-called “Tax Receivable,” which Doral relied upon heavily to satisfy its capital requirements. Co-Lead Plaintiffs allege that when the market learned of certain loan reserve and Tax Receivable events, the price of Doral stock fell, causing damage to purchasers of Doral’s stock during the Class Period.

On March 11, 2015, Doral filed a voluntary petition under Chapter 11 of Title 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), staying this Litigation against it.

On July 22, 2015, the Court issued an Opinion and Order granting in part, and denying in part, Defendants’ motion to dismiss the Complaint. On August 14, 2015, the Settling Defendants answered the Complaint.

During the course of the Litigation, the parties engaged the services of David Geronemus, Esq. of JAMS, a nationally recognized mediator. The parties exchanged detailed mediation statements and engaged in an in-person mediation session with Mr. Geronemus on December 17, 2015. These efforts culminated with the agreement to settle the Litigation for $7,000,000, subject to the authorization of payment of insurance proceeds by the Bankruptcy Court, and approval of the Settlement by the Court.

Settling Defendants deny each and all of the claims and contentions of wrongdoing alleged by Co-Lead Plaintiffs in the Litigation. Settling Defendants contend that they did not make any materially false or misleading statements, they disclosed all material information required to be disclosed by the federal securities laws, and any alleged misstatements or omissions were not made with the requisite intent or knowledge of wrongdoing. Settling Defendants also contend that any losses suffered by Members of the Class were not caused by any false or misleading statements by them and/or were caused by intervening events.

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3. Why is there a settlement?

The Court has not decided in favor of the Settling Defendants or of the Co-Lead Plaintiffs. Instead, both sides agreed to the Settlement to avoid the distraction, costs, and risks of further litigation, and Co-Lead Plaintiffs agreed to the Settlement in order to ensure that Class Members will receive compensation.

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WHO IS IN THE SETTLEMENT

4. How do I know if I am a Member of the Class?

The Court directed that everyone who fits this description is a Class Member: all Persons or entities who purchased or otherwise acquired Doral common stock during the period from April 2, 2012, through and including May 1, 2014, and were allegedly damaged thereby, except those Persons and entities that are excluded.

Excluded from the Class are the Defendants; the other officers and directors of Doral during the Class Period; members of the immediate families of any excluded person; the legal representatives, heirs, successors, or assigns of any excluded person or entity; and any entity controlled by, or in which Defendants have or had a controlling interest. Also excluded from the Class are those Persons who timely and validly exclude themselves therefrom by submitting a request for exclusion in accordance with the requirements set forth in question 11 below.

Please Note: Receipt of a Notice does not mean that you are a Class Member or that you will be entitled to receive a payment from the Settlement. If you are a Class Member and you wish to be eligible to participate in the distribution of proceeds from the Settlement, you are required to submit a Proof of Claim form and the required supporting documentation postmarked or submitted online on or before August 29, 2016.

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5. What if I am still not sure if I am included?

If you are still not sure whether you are included, you can ask for free help. You can contact the Claims Administrator toll-free at 1-877-301-0353, or you can fill out and return a Proof of Claim form, to see if you qualify.

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THE SETTLEMENT BENEFITS – WHAT YOU GET

6. What does the Settlement provide?

The Settlement provides that, in exchange for the release of the Released Claims (defined below) and dismissal of the Litigation, Settling Defendants have agreed to pay (or cause to be paid) $7 million in cash to be distributed after taxes, fees, and expenses, pro rata, to Class Members who send in a valid Proof of Claim form pursuant to the Court-approved Plan of Allocation.

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7. How much will my payment be?

Your share of the Net Settlement Fund will depend on several things, including the total amount of claims represented by the valid Proof of Claim forms that Class Members send in, compared to the amount of your claim, all as calculated under the Plan of Allocation discussed below.

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HOW YOU GET A PAYMENT – SUBMITTING A CLAIM FORM

8. How can I get a payment?

To be eligible to receive a payment from the Settlement, you must submit a Proof of Claim form. A Proof of Claim form is enclosed with the Notice or it can be downloaded on this website. Read the instructions carefully, fill out the Proof of Claim form, include all the documents the form asks for, sign it, and mail or submit it online so that it is postmarked or received no later than August 29, 2016.

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9. When would I get my payment?

The Court will hold a Settlement Hearing on August 8, 2016, at 9:00 a.m., to decide whether to approve the Settlement. If the Court approves the Settlement, there might be appeals. It is always uncertain whether appeals can be resolved, and if so, how long it would take to resolve them. It also takes time for all the Proofs of Claim to be processed. Please be patient.

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10. What am I giving up to get a payment or to stay in the Class?

If you remain a Class Member, and if the Settlement is approved, you will give up all “Released Claims” (as defined below), including “Unknown Claims” (as defined below), against the “Released Persons” (as defined below):

  • “Released Claims” means any and all claims and causes of action of every nature and description, whether known or unknown, whether arising under federal, state, common, statutory or foreign law, or any other law, rule or regulation that arise out of or relate in any way to both: (i) the purchase or acquisition of Doral common stock during the Class Period, and (ii) the acts, facts, statements, or omissions that were asserted or could have been asserted in the Litigation by Co-Lead Plaintiffs or Members of the Class. “Released Claims” does not include: (i) claims to enforce the Settlement; and (ii) claims in any related derivative action. “Released Claims” includes “Unknown Claims” as defined below.
  • “Released Defendants’ Claims” means any and all claims and causes of action of every nature and description (including Unknown Claims), whether arising under federal, state, common or foreign law, that arise out of or relate in any way to the institution, prosecution or settlement of the claims against Defendants, except for claims relating to the enforcement of the Settlement.
  • “Released Persons” means each and all of the Settling Defendants and all parties previously named as defendants (“Defendants”), the Settling Defendants’ insurers, and their Related Parties.
  • “Related Parties” means each of a Defendant’s respective present and former parents, subsidiaries, divisions and affiliates and the respective present and former employees, members, partners, principals, officers, directors, attorneys, advisors, accountants, auditors, and insurers of each of them; and the predecessors, successors, estates, heirs, executors, trusts, trustees, administrators, agents, representatives and assigns of each of them, in their capacity as such.
  • “Unknown Claims” means any Released Claims or Released Defendants’ Claims which any of the Settling Parties or Class Members do not know or suspect to exist in his, her, or its favor at the time of the release of the Released Persons, Co-Lead Plaintiffs, Co-Lead Plaintiffs’ Counsel, or Class Members which, if known by him, her, or it, might have affected his, her, or its settlement with and release, or might have affected his, her, or its decision not to object to this Settlement or release of the Released Persons, Co-Lead Plaintiffs, Co-Lead Plaintiffs’ Counsel, or Class Members. With respect to any and all Released Claims and Released Defendants’ Claims, the Settling Parties and the previously dismissed defendants stipulate and agree that, upon the Effective Date, the Settling Parties and the previously dismissed defendants shall expressly waive and each of the Settling Parties and the previously dismissed defendants shall be deemed to have, and by operation of the Judgment shall have, expressly waived the provisions, rights, and benefits of California Civil Code §1542, which provides:

    A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.

  • The Settling Parties and the previously dismissed defendants shall expressly waive and each of the Class Members shall be deemed to have, and by operation of the Judgment shall have, expressly waived any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law, which is similar and comparable or equivalent to California Civil Code §1542. The Settling Parties and the previously dismissed defendants may hereafter discover facts in addition to or different from those which he, she, or it now knows or believes to be true with respect to the subject matter of the Released Claims or Released Defendants’ Claims, but such person or entity shall expressly settle and release and each Class Member, upon the Effective Date, shall be deemed to have, and by operation of the Judgment shall have, fully, finally, and forever settled and released any and all Released Claims and Released Defendants’ Claims, known or unknown, suspected or unsuspected, contingent or non-contingent, whether or not concealed or hidden, which now exist, or heretofore have existed, upon any theory of law or equity now existing or coming into existence in the future, including, but not limited to, conduct which is negligent, intentional, with or without malice, or a breach of any duty, law or rule, without regard to the subsequent discovery or existence of such different or additional facts. The Settling Parties acknowledge, and the Class Members shall be deemed by operation of the Judgment to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the Settlement of which this release is a part.

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EXCLUDING YOURSELF FROM THE CLASS

If you do not want to participate in this Settlement, and you want to keep the right to potentially sue the Settling Defendants and the other Released Persons, on your own, about the claims being released by the Settlement, then you must have taken steps to remove yourself from the Settlement. This is called excluding yourself – or is sometimes referred to as “opting out.”

11. How do I get out of the Class and the proposed Settlement?

The deadline to exclude yourself from the Settlement was July 5, 2016.

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12. If I do not exclude myself, can I sue the Settling Defendants and the other Released Persons for the same thing later?

No. The deadline to exclude yourself from the Settlement was July 5, 2016. Unless you excluded yourself, you gave up any rights you may have potentially had to sue the Settling Defendants and the other Released Persons for any and all Released Claims. If you have a pending lawsuit against the Released Persons speak to your lawyer in that case immediately.

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13. If I exclude myself, can I get money from the proposed Settlement?

No. If you excluded yourself, you should not send in a Proof of Claim to ask for any money. However, if you excluded yourself, you may have the right to potentially sue or be part of a different lawsuit against the Settling Defendants and the other Released Persons.

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THE LAWYERS REPRESENTING YOU

14. Do I have a lawyer in this case?

The Court ordered that the law firms of Robbins Geller Rudman & Dowd LLP and Glancy Prongay & Murray LLP represent the Class Members, including you. These lawyers are called Lead Counsel. If you want to be represented by your own lawyer, you may hire one at your own expense.

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15. How will the lawyers be paid?

Lead Counsel will apply to the Court for an award of attorneys’ fees in the amount of thirty percent (30%) of the Settlement Amount and for expenses and costs in an amount not to exceed $175,000 in connection with the Litigation, plus interest on such fees and expenses at the same rate as earned by the Settlement Fund. In addition, the Co-Lead Plaintiffs may seek up to an aggregate amount of $30,000 for their costs and expenses incurred in connection with representing the Class in accordance with 15 U.S.C. §78u-4(a)(4). Such sums as may be approved by the Court will be paid from the Settlement Fund.

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OBJECTING TO THE SETTLEMENT

16. How do I tell the Court that I object to the proposed Settlement?

The deadline to object to the Settlement was July 5, 2016.

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THE COURT’S SETTLEMENT HEARING

The Court will hold a hearing to decide whether to approve the proposed Settlement. You may attend and you may ask to speak, but you do not have to.

17. When and where will the Court decide whether to approve the proposed Settlement?

The Court will hold a Settlement Hearing at 9:00 a.m., on August 8, 2016, in the Courtroom of the Honorable Gustavo A. Gelpi, at the United States District Court for the District of Puerto Rico, José V. Toledo U.S. Courthouse, 300 Recinto Sur Street, San Juan, Puerto Rico. At the hearing the Court will consider whether the Settlement and the Plan of Allocation are fair, reasonable, and adequate. If there are objections, the Court will consider them. The Court will listen to people who have asked to speak at the hearing. The Court may also decide how much to pay to Lead Counsel and the Co-Lead Plaintiffs. After the Settlement Hearing, the Court will decide whether to approve the Settlement and the Plan of Allocation. We do not know how long these decisions will take. You should be aware that the Court may change the date and time of the Settlement Hearing without another notice being sent to Class Members. If you want to attend the hearing, you should check with Lead Counsel or this website beforehand to be sure that the date and/or time has not changed.

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18. Do I have to come to the hearing?

No. Lead Counsel will answer questions the Court may have. But, you are welcome to come at your own expense. If you send an objection, you do not have to come to Court to talk about it. As long as you mailed your written objection on time, the Court will consider it. You may also pay your own lawyer to attend, but it is not necessary. Class Members do not need to appear at the hearing or take any other action to indicate their approval.

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19. May I speak at the hearing?

The deadline to request to speak at the Settlement Hearing was July 5, 2016.

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GETTING MORE INFORMATION

20. How do I get more information?

For even more detailed information concerning the matters involved in this Litigation, you can obtain answers to common questions regarding the proposed Settlement by contacting the Claims Administrator toll-free at 1-877-301-0353. Reference is also made to the Settlement Agreement, to the pleadings in support of the Settlement, to the Orders entered by the Court and to the other settlement related papers filed in the Litigation, which are posted on this website, and which may be inspected at the Office of the Clerk of the United States District Court for the District of Puerto Rico, Federico Degetau Federal Building, 150 Carlos Chardón Street, Room 150, San Juan, Puerto Rico, during regular business hours. For a fee, all papers filed in this Litigation are available at www.pacer.gov.

PLEASE DO NOT CALL THE COURT OR SETTLING DEFENDANTS WITH QUESTIONS ABOUT THE SETTLEMENT.

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