BankAtlantic lost jury verdicts in the suit by investors on stock fraud claim

BankAtlantic Bancorp Inc. executives misled shareholders about the riskiness of the bank's portfolio real estate loans during the economic downturn in 2007, a Miami jury ruled in a case of fraud actions brought by investors.

Jurors in federal court deliberated three days before finding today that BankAtlantic officials ignored the loan guidelines in approving loans for land development, and then misrepresented problems with the deals on wheels press and telephone conferences. The panel said BankAtlantic to pay $ 2.41 per share for damages to investors who sought to $ 3.52.

"The jury had no hesitation in holding that the defendants liable for making false and misleading statements about subprime loans," said Mark Arisohn, a lawyer for the plaintiffs. "It was important for shareholders to be claimed."

BankAtlantic, which last reported a profit in the second quarter of 2007, was trading at more than $ 44 in January 2005. The Fort Lauderdale, Florida-based bank suffered a string of losses following a financial crisis caused by the collapse of U.S. market subprime mortgages in 2007.

BankAtlantic fell 10 cents, or 13 percent to 71 cents at 4:15 am in the market in New York Stock Exchange. The shares have fallen 45 percent so far this year.

BankAtlantic's lawyers argued in the case of five weeks that the executives did not foresee the crisis in the market for Florida real estate in the aftermath of the subprime and clear understanding of the problems within the bank's loan portfolio.

Struggle Continues

"We are very disappointed with the verdict," said CEO Alan Levan BankAtlantic said in a statement. "If this result is allowed to stand, would require public companies back to the day before Congress passed the Securities Litigation Reform. We will pursue every avenue to set the verdict aside."

In adopting the act, Congress provided safe harbor to the "vision statement" and intended to provide a forum for business executives to discuss the prospects of their business and without "fear of this kind of litigation," said Levan .

The verdict may encourage other groups of investors to sue. The deadline for remedy may have expired in many cases because the market collapsed three years ago, Miami-based attorney Andrew C. Hall, who represents shareholders, said today in a telephone interview.

Too Late

"We've been in these bad times for a while," said Hall. "Many of the companies should be free of litigation due to claims that have already been launched."

Jurors were asked to evaluate 19 independent states October 19, 2006, of October 25, 2007. It was determined that bank officials knowingly made eight states during this period that violated securities laws and investors damaged.

Eugene E. Stearns, a lawyer for BankAtlantic, said the company will appeal to a variety of reasons, including the U.S. Case District Judge Ursula Ungaro before the test that four of the 19 statements were false.

"Obviously we are disappointed with the result, but in light of the court in the four states, unsurprisingly, in particular," said Stearns. "The likelihood of ever collecting a dime in this is infinitesimally small."

Leticia Jurado Bacallao, a public school teacher in third grade, said the group of seven women and two men carefully evaluated each of the 19 states.

Jury Care

"I really wanted to make sure that the applicants had shown that each false statement," said Bacallao.

Jurors reached the amount of damages by deducting 52 cents per share, from $ 2.93 the stock fell after BankAtlantic disclosed the extent of the loss of its loans in October 2007, Bacallao said. Jurors concluded that the crash was caused by economic recession and not directly attributable to bank charges, he said.

Of the five officers of the company named as defendants, including Levan, CEO and chief financial officer Valerie Toalson, the jury found that all but one made false statements. The jury acquitted John Abdo Vice President of any wrongdoing. Abdo, the current single bank official verdict, declined comment.

Investors originally sought compensation of up to $ 3.52 per share on its assertion that they were tricked into buying shares of BankAtlantic guarantees that the loan officers of the institution of real estate was solid.

Ungaro ruled that the testimony at the trial indicated damage of investors should be limited to no more than $ 3.30 per share if the jury found for shareholders.