Institutional Investors Win in Securities Fraud Suit Against BankAtlantic

(November 19, 2010) — In the first securities class action case arising out of the financial crisis to go to jury verdict, a federal jury has ruled in favor of pensions and other institutional investors in a case against BankAtlantic Bancorp.

The jury awarded $2.41 per share to investors who bought the company’s stock between April 26, 2007 and October 26, 2007. State-Boston was lead plaintiff in the case, according to a statement from Labaton Sucharow, while another party to the class action is the $151 million Erie County (Pa.) Employees’ Retirement System.

The jury ruled that executives at BankAtlantic failed to alert investors and intentionally lied about risks in its real estate loan portfolio as the US housing market collapsed, accusing the Florida-based lender’s officials of misleading shareholders on conference calls while failing to comply with proper lending procedures.

“We are extremely disappointed with the verdict,” commented BankAtlantic Bancorp’s Chairman and Chief Executive Officer Alan B. Levan in a release. “The jury found seven isolated statements made in earnings conference calls were false. He said BankAtlantic lost money and Bancorp’s stock price declined because the Florida real estate market collapsed, with the risk of that occurrence being fully, completely and timely disclosed to the market.

Labaton Sucharow partner Mark Arisohn, plaintiffs’ lead trial attorney, countered: “We’re gratified the jury held BankAtlantic and its senior management accountable for misleading investors and causing millions of dollars of losses. BankAtlantic knew of the high risk that was growing in its loan portfolio but for a year lied to its stockholders about the extent of that risk.” Matthew Mustokoff, a partner with the Barroway Topaz Kessler Meltzer & Check L.L.P. law firm in Radnor, Pa. added that depending how many shareholders come forward to claim a share of the damages, the verdict could add up to “tens of millions of dollars.”

The case is believed to be the second successful plaintiffs verdict in a securities class action case led by a public pension fund. It is also only the 12th securities fraud class action to go to trial since passage of the historic Private Securities Litigation Reform Act in 1995, according to Labaton Sucharow. The full case caption for the BankAtlantic case is, In re BankAtlantic Bancorp, Inc. Securities Litigation (No. 07-61542 S.D. Fla.).