Verdict splashes BankAtlantic

November 19, 2010, 1:30 AM UTC
Fortune

Live by the lawsuit, die – or at least get a bit scratched up – by the lawsuit.

So it is with BankAtlantic Bancorp , which Thursday pronounced itself “disappointed” after a Miami jury levied a $150 million verdict against it in a stock fraud class action.



BankAtlantic's downturn

The jury found the bank’s executives misled shareholders about the risks of bank’s real- estate-loan portfolio in 2007, as the housing bubble collapsed along with the bank’s stock price, Bloomberg reported.

It assessed damages of $2.41 a share – which happens to be triple the recent value of the bank’s stock, though it is about 30% below the sum sought by the plaintiffs.

“The jurors did not hesitate to hold the defendants accountable for having made false and misleading statements about the risky loans,” a plaintiff lawyer told Bloomberg. “It was important for shareholders to be vindicated.”

Alan Levan, BankAtlantic’s CEO, insists no one is vindicated yet – though he believes he will be when his appeal is heard.

“We are extremely disappointed with the verdict,” he said in a statement. “The jury found seven isolated statements made in earnings conference calls were false.”

Apparently false statements are OK with Levan as long as they’re isolated. He continues:

BankAtlantic lost money and Bancorp’s stock price declined because the Florida real estate market collapsed. The risk of that occurrence was fully, completely and timely disclosed to the market. No one could fairly express either surprise or deceit when that risk materialized with the collapse of the Florida housing market in late 2007.

Given BankAtlantic’s pathetic, sub-$1 share price, few people probably can fairly express interest in the verdict. But the decision is noteworthy because it BankAtlantic’s previous run in the headlines came when it sued a bank analyst, Dick Bove, over his assertion in a report that BankAtlantic and other housing-exposed banks might fail.

True, BankAtlantic hasn’t failed, but an 80-cent stock price is not exactly a sign of success, either. The suit ended up being settled without Bove having to pay up. Levan’s bluster aside, he and his impoverished shareholders would be extremely fortunate to arrive at the same result in this case.