A Florida jury recently issued a verdict in a securities fraud class action, siding with plaintiffs who accused BankAtlantic Bancorp of misrepresenting risks in its real estate loan portfolio.
The Miami jury awarded damages of $2.41 per share, which, according to some estimates, could total about $42 million. After four weeks of trial, including testimony from 13 witnesses, jurors found the company, its chief executive officer, James Lavan, and its chief financial officer, Valerie Toalson, liable for false statements made about the loan portfolio in 2007.
The Nov. 18 BankAtlantic verdict is the first jury verdict to come out of the recent financial crisis, and it could bode well for cases that are pending against other companies.
“There are a lot of defendants headed to trial who are charged with making misrepresentations about real estate loan portfolios. It’s great to see one of the early cases coming in with a verdict for plaintiffs,” said Peter Pease, a partner in Berman DeValerio’s Boston office.
The overwhelming majority of securities cases are settled or dismissed prior to trial. In fact, only 10 securities class actions have been tried to a verdict since the Private Securities Litigation Reform Act (PSLRA) took effect in 1996, according to information compiled by Adam Savett, director of securities class actions for Claims Compensation Bureau, LLC. In six of those 10 cases, juries found for plaintiffs, compared to four for defendants. (Seven more have been tried since 1996, but settled during trial, according to Savett’s data. Another 11 securities cases have gone to trial since 1996, but the challenged conduct occurred before the effective date of the PSLRA.)
The BankAtlantic case covers investors who purchased shares in the Florida-based lender between April 26 and Oct. 26, 2007.
*In August 2017, our firm name changed to Berman Tabacco. Case references and content published before that date may refer to the firm under our prior name, Berman DeValerio.