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