SEC Sues Major|Florida Bank & CEO

     MIAMI (CN) – The SEC on Wednesday charged a major Florida bank, BankAtlantic Bancorp, and its CEO Alan Levan with defrauding investors by failing to inform them about problems in the bank’s real estate portfolio during the financial crisis.



     The SEC claims that Levan and the bank made misleading statements in public filings and earnings calls “to hide the deteriorating state of a large portion of the bank’s commercial residential real estate land acquisition and development portfolio in 2007. BankAtlantic and Levan then committed accounting fraud when they schemed to minimize BankAtlantic’s losses on their books by improperly recording loans they were trying to sell from this portfolio in late 2007,” the agency said in announcing its federal complaint.
     The SEC said that despite the crashing real estate market, upon which BankAtlantic had extended large loans, the bank gave only “generic warnings” about its risks.
     According to the complaint: “BankAtlantic Bancorp, Inc. (‘Bancorp’) and its CEO and Chairman, Alan B. Levan, defrauded investors by: not timely disclosing a known trend regarding extended and downgraded loans in its commercial residential real estate land acquisition and development portfolio (the ‘Commercial Residential’ portfolio); selectively disclosing problem loans; and engaging in improper accounting treatment of loans they were attempting to sell. Levan also intentionally misled investors about the extent and nature of the problems in the Commercial Residential portfolio in related earnings calls.”
     BankAtlantic announced on Oct. 26, 2007 that it would lose $29.6 million in the financial quarter that ended on Sept. 30, and the price of BanCorp stock immediately dropped by 37 percent, the SEC says.
     It seeks penalties and an injunction telling the defendants not to do it again.

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