Doral Feud Gets Ugly

Doral Financial(DRL Quote) investors can't seem to catch a break.

The latest troubling news to come from the scandal-tarred Puerto Rican bank concerns the surprise resignation of Chairman John Ward late last week. Ward quit following a disagreement with Doral's other top executives over a potential sale of the bank.

Ward, in an email sent to some employees on Friday, says he is becoming "increasingly concerned about the process of governing this company." Ward is concerned Doral's investment bankers "will not aggressively pursue a strategic buyer.''

In November, Doral announced that it had hired Bear Stearns(BSC Quote) and JPMorgan Chase(JPM Quote) to discuss how to refinance $625 million in outstanding corporate debt. The investment banks also were brought on to examine alternatives to restructuring the bank's balance sheet.

Doral, for its part, is trying to spin Ward's departure in the best possible light. In a statement, the bank says Ward and the bank's management held "different views'' about the best way to "maximize shareholder value."

Shares of Doral, which plummeted as much as 9% in early trading, most recently were down 14 cents, or 5%, to 2.73.

Doral's stock has been riveted by a series of bad events since early 2005, stemming from its improper use of interest-rate-only strips -- a type of a derivative -- to hedge its mortgage portfolio against interest rate fluctuations. Later, Doral found problems related to the sale of some of its mortgages to other Puerto Rican banks including R&G Financial(RGF Quote) and First BanCorp(FBP Quote), both of which also have been haunted by accounting scandals.