BankAtlantic guilty of misleading investors about real estate loan portfolio
Executives at BankAtlantic Bancorp ($12.33 -0.38%) were found guilty of securities fraud last week for failing to disclose information about a real estate portfolio to investors.
According to Mark Arisohn, the plaintiff attorney representing investors in the case, the debate was over one land loan portfolio. The portfolio lent money to investors purchasing large tracks of land in rural areas, many over 1,000 acres. The problem wasn't with the actual investments, Arisohn said, but how they were represented to investors by the bank.
"The problem was the loans got risky and internal record showed that," Arisohn told HousingWire. "The company told investors the portfolio was performing extremely well when hundreds of thousands of dollars of loans in this portfolio were on their loan watch list."
In reaction to last week's verdict, chairman and CEO of BankAtlantic Alan Levan said he was very disappointed with the decision.
"The jury found seven isolated statements made in earnings conference calls were false," Levan said. "In adopting the Private Securities Litigation Reform Act, Congress provided safe harbor within the 'forward looking statement' and intended to provide a forum for corporate executives to freely discuss their businesses and their prospects without fear of this kind of litigation."
Levan said his firm plans to file motions to set aside the verdict.
Write to Christine Ricciardi.
Disclosure: The author holds no relevant investments.
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