BankAtlantic Bancorp Inc. won a judge’s reversal of a jury verdict that awarded shareholders $2.41 a share in damages based on alleged stock-fraud.
The jury last year in federal court in Miami found that bank officials ignored lending guidelines in approving land-development loans and then misrepresented problems with those deals in public statements.
“Even if a defrauded plaintiff sells his shares at a lower price after the truth of the fraud is revealed to the market,” the loss “may reflect not the earlier misrepresentation, but changed economic circumstances,” among other things, U.S. District Judge Ursula Ungaro said in a 112-page opinion yesterday, citing previous rulings.
Evidence to the contrary “was insufficient” to support the verdict, the judge wrote. The plaintiffs also “did not produce sufficient evidence to support an award of damages in any amount,” Ungaro said.
“We are extremely surprised by the judge’s ruling and respectfully disagree,” Mark Arisohn, an attorney for the plaintiffs, said in a statement. “As the court mentioned in its decision, this issue will be resolved on appeal.”
BankAtlantic traded at more than $44 in January 2005. The Fort Lauderdale, Florida-based bank suffered a series of losses in the wake of an economic decline triggered by the collapse of the U.S. subprime-mortgage market in 2007.
The bank’s Class A shares rose 4 cents to 93 cents in New York Stock Exchange composite trading at 1:21 p.m. today.
“BankAtlantic lost money and Bancorp’s stock price declined largely because of the collapse of the Florida real estate market, a risk that was fully disclosed,” BankAtlantic Chairman and Chief Executive Officer Alan B. Levan said in a statement today.
The case is In re BankAtlantic Bancorp Inc. Securities Litigation, 07-cv-61542, U.S. District Court, Southern District of Florida (Miami).