The jury verdict entered in favor of the plaintiffs in the BankAtlantic subprime-related securities suit has been set aside by the court in a post-trial ruling. On April 25, 2011, Southern District of Florida Judge Ursula Ungaro, in a 112-page opinion (here), granted the defendants' motion for judgment as a matter of law and indicated that she will enter judgment in defendants' favor following remaining procedural issues.
BankAtlantic's shareholders had first sued the company and five of its directors and officers in October 2007. The plaintiffs essentially alleged that the defendants had violated the securities laws through misrepresentations and omissions about the poor or deteriorating credit-quality of BankAtlantic's land loan portfolio; misrepresentations or omissions of its poor underwriting practices; and misrepresentations and omissions about the adequacy of its loan loss reserves and the accuracy of its financial statements. The claims were divided into two separate alleged damages periods corresponding with declines in the company's share price on April 26, 2007 and October 26, 2007.
Judge Ungaro had initially granted the defendants' motion to dismiss but she denied their renewed dismissal motion after the plaintiffs amended their pleadings (refer here), and the case went to trial. On November 18, 2010, the jury returned its verdict, as discussed here.
As Judge Ungaro summarized the verdict in her April 25 opinion, "the Jury returned a verdict mainly in Defendants' favor." The jury found no liability as to any defendant with respect to the first alleged damages period. However, with respect to five alleged misstatements in the second period, the Jury concluded with respect to four alleged misstatements that the company it s former Chairman and CEO had violated the securities laws. The jury also concluded that the company, the Chairman and the company's CFO violated the securities laws with respect to a fifth alleged misrepresentation.
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Read other items of interest from the world of directors & officers liability, with occasional commentary, at the D&O Diary, a blog by Kevin LaCroix.
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