Cohen, Milstein, Hausfeld & Toll, P.L.L.C. Announces Class Action Lawsuit on Behalf of Investors in Franklin Bank Corp

Business Wire,  July 15, 2008  

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WASHINGTON -- The law firm Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has filed a lawsuit in the United States District Court for the Southern District of Texas on behalf of all purchasers of the common stock and preferred shares of Franklin Bank Corp. ("Franklin") (NASDAQ:FBTX) between April 26, 2007 and May 1, 2008, inclusive (the "Class Period").

The complaint charges Franklin and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Franklin operates as the bank holding company for Franklin Bank, S.S.B. (the "Bank"), a savings bank that provides community banking products and services, and commercial banking services to corporations and other business clients, and originates single family residential mortgage loans primarily in Texas.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company's business and financial results. According to the complaint, as a result of defendants' false statements, Franklin's stock traded at artificially inflated prices during the Class Period, reaching a high of $16.89 per share in May 2007. While Franklin's stock was allegedly inflated due to defendants' improper accounting and false assurances about its business, defendants completed a $25 million secondary offering of the Company's stock.

Then, on May 1, 2008, after the market closed, Franklin issued a press release stating that the Bank had submitted to the Federal Deposit Insurance Corporation (the "FDIC") its call report for the quarter ended March 31, 2008. In addition, the Bank also submitted to the FDIC amended call reports for the periods ended September 30, 2007 and December 31, 2007. Based on Franklin's ongoing review and evaluation of its 2007 financial statements, certain changes to the Bank's previously submitted call reports were necessary. On this news, Franklin's stock dropped from $1.72 per share on May 1, 2008 to $1.29 per share on May 2, 2008, and to $1.03 per share by May 5, 2008.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) defendants' assets contained tens of millions of dollars worth of impaired and risky securities, many of which were backed by mortgage loans; (b) defendants failed to properly account for Franklin's mortgage-related assets, failing to adequately reflect impairment in the loans; (c) defendants had not properly accounted for single family loans serviced by third parties that became delinquent; and (d) Franklin's call reports filed with the FDIC beginning with the September 2007 quarter, at the latest, and its Form 10-Q for the September 2007 quarter were in error due to the Company's failure to properly account for losses on mortgage loans and REO properties.

If you are a member of the class, you may, no later than August 5, 2008, request that the Court appoint you as Lead Plaintiff of the class. Any member of the purported class may move the Court to serve as Lead Plaintiff through counsel of their choice or may choose to remain an absent class member.

Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has significant experience in prosecuting investor class actions and actions involving securities fraud. The firm has offices in Washington, D.C., New York, Philadelphia, Chicago, San Francisco, and London, and is active in major litigation pending in federal and state courts throughout the nation. A copy of the Complaint can be found on the firm's website at www.cmht.com.

The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm to lead positions in complex multi-district or consolidated litigation. Cohen, Milstein, Hausfeld & Toll, P.L.L.C. has taken a lead role in numerous important cases on behalf of defrauded investors, and has been responsible for a number of outstanding recoveries which, in the aggregate, total in the billions of dollars.

If you have any questions about this notice or the action, or with regard to your rights, please contact either of the following:

Steven J. Toll, Esq.
Prithvi Jagannath
Cohen, Milstein, Hausfeld & Toll, P.L.L.C.
1100 New York Avenue, N.W.
West Tower, Suite 500
Washington, D.C. 20005
Telephone: (888) 240-0775 or (202) 408-4600
Email: stoll@cmht.com or pjagannath@cmht.com

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