In re BankAtlantic Bancorp, Inc. Securities Litigation

On November 18, 2010, a jury in the federal court in Miami found BankAtlantic Bancorp, Inc., its CEO and Chairman, Alan Levan, and its CFO, Valerie Toalson, liable for securities fraud in a class action brought by Labaton Sucharow, as co-lead counsel, representing State-Boston Retirement System, as lead plaintiff. After a four-week trial, the jury found BankAtlantic and its two senior officers intentionally lied about and failed to disclose the extent of risk in the bank's troubled land loan portfolio in 2007. This case is the first financial crisis related securities class action to go to jury verdict. The jury found that investors overpaid by $2.41 per share between April 26, 2007 and October 26, 2007.

Investors accused Ft. Lauderdale-based BankAtlantic of serial misrepresentations and omissions regarding the extent of the high risk loans in its so-called "land loan" portfolio – those made for acquisition and development of residential buildings in Florida – between October 2006 and October 2007. Prior to trial, Southern District of Florida Judge Ursula Ungaro ruled that four statements made by Levan about the health of the bank's land loan portfolio were false. Levan made those statements on a July 2007 conference call with investors, four months after writing an internal email admitting, "I believe we are in for a long sustained problem in this sector." The jury found those statements were material and made with intent to defraud. The jury also found three other statements fraudulent, including a statement made in Bancorp's Form 10-Q for the second quarter of 2007 that falsely understated the amount of the bank's loans that were "potential problems."

On April 25, 2011, Judge Ungaro vacated the jury's verdict.

Lead trial counsel Mark S. Arisohn stated, "We are extremely surprised by the Judge's ruling and respectfully disagree with it. This was the first securities fraud lawsuit relating to the financial crisis to go to trial and the jury returned a unanimous verdict finding BankAtlantic liable for its wrongdoing. The Court's decision clearly and unequivocally upheld the jury's finding that BankAtlantic made materially false and misleading statements to the market and its shareholders. However, it vacated the jury's verdict on a technical matter relating to expert testimony, which, again, we respectfully disagree with. As the Court mentioned in its decision, this issue will be resolved on appeal."

For more information regarding the case, please call 212-907-0740.