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FORT LAUDERDALE, Fla. - (Mealey's) A federal jury in Florida handed down a rare verdict in a securities class action lawsuit on Nov. 18, finding subprime lender BankAtlantic Bancorp. Inc. and certain of its executive officers guilty of federal securities law violations that led BankAtlantic's stock to trade at an artificially high rate (In re BankAtlantic Bancorp, Inc. Securities Litigation, No. 07-61542, S.D. Fla.).
The jury found that BankAtlantic, former Chief Executive Officer Alan B. Levan and Chief Financial Officer Valerie Toalson violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by issuing a series of false and misleading statements concerning the credit quality of certain loans in BankAtlantic's portfolio.
The jury also found that as a result of the defendants' alleged misstatements, BankAtlantic's stock traded at an artificially high rate, $2.41 per share over the proper price, until the fraud was disclosed.
Shareholders filed a first amended consolidated complaint in the U.S. District Court for the Southern District of Florida on behalf of all purchasers of BankAtlantic common stock from Nov. 9, 2005, to Oct. 25, 2007.
The shareholders alleged that BankAtlantic, Alan Levan, Toalson, former Chief Financial Officer James A. White, vice chairman of the board of directors John E. Abdo and CEO Jarrett S. Levan violated Sections 10(b), 20(a) and 20A of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b-5 by issuing a series of false and misleading statements regarding the credit quality of certain loans in BankAtlantic's portfolio.
The defendants moved for summary judgment and to exclude the testimony of the shareholders' expert witness, Candace L. Preston, while the shareholders moved for partial summary judgment.
In an Aug. 8 ruling, Judge Ursula Ungaro granted in part and denied in part the defendants' motion to exclude Preston's testimony and granted in part and denied in part the defendants' motion for summary judgment. Judge Ungaro also granted the shareholders' motion for partial summary judgment.
Verdicts in securities class action lawsuits are extremely rare. Only 12 securities class actions have been since the Private Securities Litigation Reform Act of 1995 was passed by Congress.
[Editor's Note: Full coverage will be in the November issue of the LexisNexis Financial Services Litigation Report. In the meantime, the verdict form is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844. Document #88-101123-094V. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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