Capstead Mortgage Corp. Sued for Securities Fraud Violations.

PHILADELPHIA--(BUSINESS WIRE)--Aug. 5, 1998--Capstead Mortgage Corp. (NYSE: CMO) and various of its senior officers engaged in securities fraud, according to a class lawsuit filed in the United States District Court for the Northern District of Texas, Northern Division.

Berger & Montague, P.C., one of the nation's foremost securities litigation firms, is among counsel for the plaintiffs.

According to the lawsuit, defendants materially inflated the market price of Capstead's stock during the period April 17, 1997 through June 25, 1998.

Defendants did so by misrepresenting the strength and diversification of Capstead's portfolio, falsely representing to the market that the Company had positioned itself to generate strong earnings in virtually any interest rate environment.

In addition, the complaint charges that defendants issued false financial statements that overstated Capstead's earnings and assets by failing to take necessary write downs to the portfolio. Finally, on June 26, 1998, Capstead could no longer conceal its huge problems.

Capstead announced that it would write down the value of its mortgage servicing assets and sell its interest-only securities at an enormous loss, resulting in losses of about $255 million in the second quarter of 1998.

These losses were greater than all the net income the Company reported during the entire 14-month class period from April 1997 to June 1998.

Upon disclosure of the truth, the price of Capstead's stock fell immediately to as low as $8 11/16, 68 percent lower than the Class Period high of $27 13/16, on huge volume.

The complaint charges that, at the same time defendants were artificially inflating the market, insiders exchanged certain Capstead securities for cash, resulting in more than $10.6 million in proceeds to the insiders.

This notice to class members is being made pursuant to applicable law. If you purchased the stock of Capstead Mortgage Corp. (NYSE: CMO) during the period April 17, 1997 through June 25, 1998, inclusive, you may wish to join the action.

You may move the move the court to serve as a lead plaintiff on or before 60 days from July 23, 1998.

If you would like to discuss this action, or if you have any questions concerning this notice or your rights with respect to this matter, you may contact:

Sherrie R. Savett, Esq., Todd S. Collins, Esq. or Jill E. Sterbakov, Esq. BERGER & MONTAGUE, P.C. 1622 Locust Street Philadelphia, PA, 19103 Telephone: [phone] or 215/875-3000 Fax: [phone] E-mail: [e-mail]

Berger & Montague invites you to visit its Web site on the internet at http://home.bm.net

The law firm of Berger & Montague, P.C., has extensive experience in securities class action cases. The Berger firm has played lead roles in major cases over the past 25 years which have resulted in recoveries in the billions of dollars to investors.

Courts have widely recognized the Berger firm for the high quality of its legal representation on behalf of defrauded investors.

   CONTACT:  BERGER & MONTAGUE, P.C.
              Sherrie R. Savett, Esq., Todd S. Collins, Esq. or
              Jill E. Sterbakov, Esq., 888/891-2289 or 215/875-3000
              Fax: [phone]
              E-mail: [e-mail]
              Web site: http://www.home.bm.net