LOS ANGELES (CN) - Major shareholders claim Hanmi Bank, a Korean-American community bank, propped up its share price by misrepresenting its financial health and the extent of its bad loans, and when the truth came out and the stock collapsed, it cost the shareholders $50 million.
The Ahn family claims the bank misrepresented itself as "careful and responsible in its lending," while it was breaching its loyalty to shareholders by "engaging in interested director transactions, usurping corporate opportunities, and taking under-the-table money and other kickbacks."
Hanmi was established in 1982 to serve the Korean-American community in Los Angeles. The Ahns say they own 1,675,406 shares of bank stock.
They claim the bank "squandered much of HFC's [Hanmi Financial Corporation] and HB's [Hanmi Bank] capital in a series of reckless and unwise investments, and through corporate mismanagement. This included the exploitation by several members of the Board of Directors of HFC of their fiduciary positions by engaging in interested director transactions and other conflicts of interest, and violations of its own Corporate Governance Guidelines."
The bank stock has declined in value from $9.91 in 2006 to 94 cents on Nov. 26 this year, the complaint states. The Ahns claim that the Federal Reserve Bank of San Francisco "strongly recommended that HFC remove three or four of its directors due to unsound and imprudent business practices."
The family says they have lost more than $50 million "as a direct and proximate result of defendants' fraud".
The Ahns are represented by Maxwell Blecher with Blecher & Collins.
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