Posted on Friday, November 19, 2010
BankAtlantic Bancorp misled investors about its banking subsidiary’s financial health as South Florida’s commercial real estate market headed downhill in the recession, a Miami federal jury found today in a shareholder class action.
The verdict could be a harbinger for financial institutions around the nation, which, like BankAtlantic Bancorp, rode the real estate wave until it crashed.
The parent of Fort Lauderdale-based BankAtlantic claimed it was ahead of the industry curve with public warnings about the declining state of its developer loans, but shareholders insisted internal documents reflected even greater concern about loan defaults.
The jury found company executives knowingly made eight false statements and decided investors overpaid by $2.41 per share from April 26 to Oct. 26, 2007, for losses projected to be worth millions of dollars.
Total damages will depend on when shareholders bought the stock and how long they owned it in the time window when jurors found misleading comments were being made. Shareholder attorneys say that won’t be known until class members file claims.
The six-week securities fraud trial before U.S. District Judge Ursula Ungaro was only the 12th since Congress clamped down on shareholder lawsuits by passing the Private Securities Litigation Reform Act of 1995.
The case pitted New York attorney Mark Arisohn of Labaton Sacharow on behalf of shareholders led by the State-Boston Retirement System against holding company attorney Eugene Stearns of Stearns Weaver Miller Alhadeff & Sitterson in Miami.John Pacenti
Daily Business Review