R&G Financial Corporation Securities Litigation

During the Class Period, R&G was a Puerto Rico-chartered, financial holding company that, through its wholly-owned subsidiaries, was engaged in banking, mortgage banking, broker-dealer and insurance activities, with operations in Puerto Rico and the continental United States. The Company was engaged in providing a full range of banking services in Puerto Rico and in the Orlando and Tampa/St. Petersburg, Florida markets.

On April 25, 2005, R&G issued a press release announcing that it would revise the methodology used in valuing residual interests retained in connection with its purported sales of mortgage loans to other financial institutions, and would restate its financial statements for the period January 1, 2003 to December 31, 2004.

On July 27, 2005, R&G announced that it would restate its interim and audited consolidated financial statements for the year ended December 31, 2002.

PwC served as R&G's independent outside auditor at all relevant times, and provided auditing and accounting services to the Company, which included the issuance of auditor's reports on R&G's financial statements for the fiscal years 2002, 2003 and 2004. PwC's auditor's reports were included in the Company's Annual Reports on Forms 10-K for the fiscal years 2002, 2003 and 2004.

Beginning on April 27, 2005, various actions were commenced in the United States District Court for the Southern District of New York and the United States District Court for the District of Puerto Rico (the "Securities Class Actions"). The complaints in those actions alleged, inter alia, that certain of the defendants violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and Section 20(a) of the Exchange Act, and claimed that R&G had fraudulently misstated its financial statements by using an incorrect valuation methodology for certain securitization transactions.

On July 26, 2005, the Court entered an Order consolidating the Securities Class Actions into the Consolidated Action, appointing Lead Plaintiffs as lead plaintiffs in the Consolidated Action, and ordering that Lead Plaintiffs were to file an amended complaint.

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