Jury Returns Plaintiffs' Verdict in the BankAtlantic Credit Crisis-Related Securities Suit

In the first securities class action jury verdict to arise out the credit crisis, on Thursday November 18, 2010, the jury in the BankAtlantic securities lawsuit in federal court in Miami returned a verdict in the plaintiffs' favor, finding seven of the statements at issue to have been false, and awarding damages of $2.41 per share. According to sources, this damage measure translates to total damages of as much as $42 million.

The case went to the jury last week after more than four weeks of trial, testimony from 13 fact witnesses and one expert witness. The verdict form the jury was required to complete ran to some 53 pages. At the outset of the trial, the lead defense counsel had characterized the claim as a "completely made-up, frivolous claim."

In their completed verdict form, the jury found the company and two of the five individual defendants to be liable for seven of the 19 statements at issue. The two defendants held liable are the company's CEO, James Lavan, and its CFO, Valerie Toalson. All of the statements for which the defendants were found liable had been made in 2007.

As reflected here, the plaintiffs' complaint had alleged that the defendants had made misleading statements about the bank's loan portfolio from October 2006 through October 2007 and had "materially understated reserves for real estate loan losses on its financial statements, and thus materially overstated net income." The plaintiffs alleged that the defendants (the bank holding company and five of its individual directors and officers) had made misleading statements about the quality of the bank's loan portfolio, the bank's exposure to loan losses and the bank's loan loss reserves.

Read Jury Returns Plaintiffs' Verdict in the BankAtlantic Credit Crisis-Related Securities Suit in its entirety at the D&O Diary, a blog by Kevin LaCroix.