Securities Class Action Lawsuit Filed Against Downey Financial

On May 16, 2008, a class action lawsuit was filed in the United States District Court for the Central District of California against Downey Financial Corp. (NYSE: DSL). The complaint alleges violations of federal securities laws, Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, including allegations of issuing a series of material misrepresentations to the market which had the effect of artificially inflating the