MONTGOMERY, Ala. (CN) - Colonial BancGroup defrauded investors by announcing on Dec. 2 that it would get $550 million through the Troubled Asset Relief program, but not disclosing until Jan. 27 that that was contingent upon raising another $300 million itself, shareholders say in a federal class action.
Shareholders say Colonial's share price rose from $1.76 to $3.08 after the first announcements, but tanked to 85 cents the day after the Jan. 27 revelation. It remains about 80 cents a share.
Also sued are CEO Robert Lowder, CFO Sarah Moore, and CAO T. Brent Hicks.
Lead counsel is Battle Fleenor & Green of Birmingham.
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Colonial BancGroup Files Chapter 11 August 27, 2009