A Miami federal court found executives at BankAtlantic Bancorp (BBX)
guilty of securities fraud Thursday because they failed to disclose certain investment activity to investors.
The company must give $2.41 per share to each shareholder who purchased BankAtlantic common stock between April 26 and Oct. 26, 2007.
According to the complaint
, the company granted a $27 million loan without an adequate appraisal of the underlying collateral, "significantly understated" its at-risk portfolio, lacked adequate internal and financial controls and deferred the recognition of losses associated with certain nonaccrual loans rather than taking timely writedowns on those loans.
"On Oct. 25, 2007, the company shocked investors when it reported its third quarter 2007 financial and operational results," the complaint said.
For the quarter, BankAtlantic reported a net loss of $29.6 million, or 52 cents per share, compared to net income of $2.5 million, or 4 cents per share, for the third quarter of 2006.
Chairman and CEO of BankAtlantic Bancorp Alan Levan said he was very disappointed with the verdict of the case.
"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."
According to Levan's statement, the court ruled that BankAtlantic's allowance for loan loss provision, and BankAtlantic Bancorp's financial statements were accurately calculated and reported throughout the class period.
Levan also said his firm plans to file motions to set aside the verdict.
BankAtlantic Bancorp is a financial services holding company and the parent company of BankAtlantic
, one of Florida's largest banks. The federal litigation will reportedly not affect the operations of BankAtlantic as the charges were brought against the parent company.
Write to Christine Ricciardi
Disclosure: The author holds no relevant investments.