Free Declaration - District Court of Delaware - Delaware

Case 1 :05-cv-00293-GMS Document 4-2 Filed 07/05/2005 Page 1 of 2
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Press Release Source: Lerach Coughlin Stoia Geller Rudman & Robbins LLP
Lerach Coughlin Stoia Geller Rudman & Robbins LLP Files Class
Action Suit Against MBNA Corp.
Thursday May 5, 5:45 pm ET
SAN DIEGO--(BUSINESS WIRE)--May 5, 2005——Lerach Coughlin Stoia Geller Rudman & Robbins LLP ("Lerach
Coughlin") (http_;_//www,iei;achi_aw_,com/caseyiinbna,/) today announced that a class action has been commenced in
the United States District Court for the District of Delaware on behalf of purchasers of MBNA Corp. ("lVlBNA")
(NYSE;5R_B - News) publicly traded securities during the period between Januaw 20, 2005 and April 21, 2005 (the
"Class Period").
lf you wish to serve as lead plaintiff, you must move the Court no later than 60 days from today. lf you wish to
discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiffs
counsel, William Lerach or Darren Robbins of Lerach Coughlin at 800/449-4900 or 619/231-1058, or via e—mail at
w§i@ie;a;ghiayv_,cg,rn. lf you are a member of this class, you can view a copy of the complaint as filed orjoin this
class action online at http://wvvvv.lerachlaw.com/cases/mbna/. Any member of the purported class may move the
Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent
class member.
The complaint charges MBNA and certain of its ofhcers and directors with violations ofthe Securities Exchange Act
of 1934. MBNA is an international financial services company providing lending, deposit, and credit insurance
products and services to its customers.
The complaint alleges that on January 21, 2005, the start of the Class Period, MBNA issued the first earnings
forecast in the Company's history, projecting an ongoing 12% earnings increase, with a 10% increase in 2005
earnings over 2004’s. Defendants said MBNA would make this target because the Company had already drastically
reduced its own reliance on insidious no-interest loans, rendering its own loan portfolio more profitable than that of
its competitors. Defendants also projected a 20%+ increase in Return on Equity. Defendants' EPS estimate for
2005 was $2.35 per share, which was 10% above the Company's 2004 EPS. These projections were being made
nearly one-third of the way into Q1 2005 and would be repeated and detailed at the Company's January 21, 2005
and February 9, 2005 investor conferences. On April 21, 2005, defendants disclosed that MBNA had earned only
$0.02 in Q1 2005 -- a 94% decline from the $0.59 per share it reported in Q4 2004 —— and that it was guiding 2005
EPS growth down to "significantly below" its prior 10% growth estimate.
According to the complaint, the true facts, which were known by each of the defendants but concealed from the
investing public during the Class Period, were as follows: (a) the Company had been experiencing "unexpectedly
high payment volumes from U.S. credit card customers" during Q1 2005, reducing managed loans in the quarter
"more than in prior years"; (b) of the prepays, the higher interest rate borrowers were prepaying more than the
lower interest rate borrowers, resulting in the prepays having a more adverse impact on the Company's yield on
managed loans; (c) MBNA was suffering from an unseasonably sharp contraction in loans during Q1 2005 causing
total managed loans to decrease; (d) the Company had been aggressively recognizing gains on sales of securitized
no—interest loan receivables through off-balance sheet funding structures; (e) MBNA was experiencing higher—than-
expected delinquencies during Q1 2005; (f) the Company had reversed its margin—protection strategy of reducing
reliance on no—interest loans and teaser promotions and was instead increasing its offering of no—interest loans,
which, by defendants' own admissions, will significantly reduce future earnings; (g) losses on loan receivables and
managed loans had increased; (h) approximately 50% of MBNA's receivables were on variable floating interest
rates while approximately 80% of the Company's funding was tied to LlBOR, such that the Company's cost of funds
was increasing more rapidly than the interest payments it was receiving from borrowers when interest rates
increased; (i) due tothe increase in prepays, the interest—only securitization strip securities valued on the
Company's books at $1.3 billion were overstated; and (j) the Company's previously announced Q1 2005

Case 1:05-cv-00293-Gl\/IS Document 4-2 Filed 07/05/2005 Page 2 of 2
restructuring charge had doubled. As a result of these false statements, l\/lBNA's stock traded at inflated levels
during the Class Period which permitted the Company's top officers and directors to sell more than $75 million
worth of their own shares. Following the Company's April 21, 2005 disclosures concerning its business operations,
Hnancial results and reduced 2005 earnings expectations, the Company's stock price plummeted from its closing
price of $23.11 on the close of April 20, 2005 to below $19 per share on extremely high trading volume of 51 million
shares.
Plaintiff seeks to recover damages on behalf of all purchasers of MBNA publicly traded securities during the Class
Period (the "Class"). The plaintiff is represented by Lerach Coughlin, which has expertise in prosecuting investor
class actions and extensive experience in actions involving financial fraud.
Lerach Coughlin, a 150—lawyer firm with ofnces in San Diego, San Francisco, Los Angeles, New York, Boca Raton,
Washington, D.C., Houston, Philadelphia and Seattle, is active in major litigations pending in federal and state
courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded
investors, consumers, and companies, as well as victims of human rights violations. Lerach Coughlin lawyers have
been responsible for more than $20 billion in aggregate recoveries. The Lerach Coughlin Web site
) has more information about the firm.
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