Post by Sapphire Capital on Jul 22, 2008 1:51:45 GMT 4
July 21 (Bloomberg) -- BankAtlantic Bancorp Inc. said it sued Ladenburg Thalmann & Co. and analyst Richard Bove for a report on possible bank failures called ``Who is Next?,'' alleging the institution was defamed by its inclusion.
BankAtlantic, a unit of BFC Financial Corp., sued for defamation and negligence in a complaint filed today in state court in Broward County, Florida, according to the Fort Lauderdale-based bank. The filing couldn't be independently confirmed. BankAtlantic jumped as high as 31 percent.
``While Bove's report purports to consider which banks might fail, he failed to examine the health of the banks and thrifts in his report,'' BankAtlantic Chairman Alan Levan said in the statement. ``He only examined holding company data which, in at least our case, is meaningless information.''
The Florida lawsuit follows a North Carolina appeals court ruling in April holding that analysts couldn't be sued for expressing opinions. In that case, Nucor Corp., the largest U.S. steelmaker by market value, lost a bid to reinstate a libel and unfair trade practices lawsuit against Prudential Equity Group LLC and two former analysts for comments made in a report.
The Charlotte, North Carolina-based steelmaker sued Prudential and analysts John Tumazos and Paretosh Misra in 2007 after they wrote Nucor may trigger antitrust lawsuits and had ``monopoly dreams.''
107 Institutions
BankAtlantic's shares fell 25 percent to close at 90 cents on July 14, the day after Bove's report was published. The bank said at the time that the analyst mistakenly looked to the finances of its holding company instead of those of the bank.
``As an analyst, I feel that I should be able to say what I choose to say as long as it is objective and based upon fact,'' Bove said today in an interview with Bloomberg Television. ``In the banking industry, there is a fear that statements by analysts which are very negative could have an impact.''
Bove, 67, added that he wasn't aware of any other analyst ``that's been sued for writing something about the industry.''
Jennifer Clarin, a spokeswoman for the bank, today declined to provide a copy of the complaint.
In the report, 107 U.S. financial institutions were ranked by calculating ratios of non-performing assets to outstanding loans. Bove said in the report that a ratio higher than 5 percent ``suggests danger.'' BankAtlantic's ratio for the first quarter ending March 31 is 4.4 percent, according to the report.
`Danger Zone'
``Bove's `Danger Zone' was above 5 percent of non-performing loans to total loans and above 40 percent of non-performing loans to total common equity plus reserves,'' the bank said in the statement. ``BankAtlantic's numbers are not even close.'' The bank had a 38.4 percent ratio in the second measurement.
``These cases are not easy,'' said Bruce Rosen, a lawyer with McCusker Anselmi Rosen & Carvelli, who specializes in media law. An analyst need only show that he was relying on facts to defend himself, he added. ``As long as your opinion is based upon real facts, that's permitted, especially when you are talking about issues of major public concern.''
Ladenburg spokesman Paul Caminiti said the firm will fight what he termed a ``meritless'' lawsuit by the bank.
The former regulator of IndyMac Bancorp Inc., which was seized by U.S. authorities on July 11, said the media has ``stoked public fears'' about banks by interviewing customers at those deemed at risk of collapse by analysts and research firms.
Television Stations
News stories, especially by television stations, based on lists compiled by analysts, threatened to damage healthy banks and derail efforts to rescue troubled ones, John Reich, director of the Office of Thrift Supervision, said today at an American Bankers Association meeting in Orlando, Florida.
In the BankAtlantic case, Bove characterized his comments as ``my personal views'' and labeled the report as opinion. The bank is referred to in two charts included in the report.
BankAtlantic said in the statement that it's ``well capitalized,'' that its ratio of non-performing loans to total loans is 1.25 percent and that its ratio of non-performing loans to capital and reserves is 12.5 percent.
The bank alleged that Bove took data provided by a research firm on bank and thrift holding companies, and ``asserted and implied that holding company data represented the financial condition of insured subsidiaries.''
The lawsuit comes as the Securities and Exchange Commission has subpoenaed Wall Street's biggest firms seeking trading records and e-mails, according to a person familiar with the situation.
New Front
The subpoenas mark a new front in the broadest U.S. investigation of Wall Street trading since state and federal regulators targeted mutual-fund abuses in 2003. The SEC issued an emergency order curtailing short selling in financial stocks, including Lehman Brothers Holdings Inc. and mortgage-finance companies Fannie Mae and Freddie Mac.
Kevin Goering, a defamation specialist at law firm Sheppard Mullin Richter & Hampton in New York, said the Bank Atlantic lawsuit may be an ``uphill battle'' for the bank. ``The bank will have to show actual malice because it's a public figure.''
Columbia Law School securities professor John Coffee said the BankAtlantic lawsuit is ``exactly what the First Amendment is there to preclude.''
BankAtlantic rose 21 cents to $1.89 in New York Stock Exchange composite trading. The holding company, Fort Lauderdale- based BFC Financial, rose 4 cents to 62 cents.
BankAtlantic, a unit of BFC Financial Corp., sued for defamation and negligence in a complaint filed today in state court in Broward County, Florida, according to the Fort Lauderdale-based bank. The filing couldn't be independently confirmed. BankAtlantic jumped as high as 31 percent.
``While Bove's report purports to consider which banks might fail, he failed to examine the health of the banks and thrifts in his report,'' BankAtlantic Chairman Alan Levan said in the statement. ``He only examined holding company data which, in at least our case, is meaningless information.''
The Florida lawsuit follows a North Carolina appeals court ruling in April holding that analysts couldn't be sued for expressing opinions. In that case, Nucor Corp., the largest U.S. steelmaker by market value, lost a bid to reinstate a libel and unfair trade practices lawsuit against Prudential Equity Group LLC and two former analysts for comments made in a report.
The Charlotte, North Carolina-based steelmaker sued Prudential and analysts John Tumazos and Paretosh Misra in 2007 after they wrote Nucor may trigger antitrust lawsuits and had ``monopoly dreams.''
107 Institutions
BankAtlantic's shares fell 25 percent to close at 90 cents on July 14, the day after Bove's report was published. The bank said at the time that the analyst mistakenly looked to the finances of its holding company instead of those of the bank.
``As an analyst, I feel that I should be able to say what I choose to say as long as it is objective and based upon fact,'' Bove said today in an interview with Bloomberg Television. ``In the banking industry, there is a fear that statements by analysts which are very negative could have an impact.''
Bove, 67, added that he wasn't aware of any other analyst ``that's been sued for writing something about the industry.''
Jennifer Clarin, a spokeswoman for the bank, today declined to provide a copy of the complaint.
In the report, 107 U.S. financial institutions were ranked by calculating ratios of non-performing assets to outstanding loans. Bove said in the report that a ratio higher than 5 percent ``suggests danger.'' BankAtlantic's ratio for the first quarter ending March 31 is 4.4 percent, according to the report.
`Danger Zone'
``Bove's `Danger Zone' was above 5 percent of non-performing loans to total loans and above 40 percent of non-performing loans to total common equity plus reserves,'' the bank said in the statement. ``BankAtlantic's numbers are not even close.'' The bank had a 38.4 percent ratio in the second measurement.
``These cases are not easy,'' said Bruce Rosen, a lawyer with McCusker Anselmi Rosen & Carvelli, who specializes in media law. An analyst need only show that he was relying on facts to defend himself, he added. ``As long as your opinion is based upon real facts, that's permitted, especially when you are talking about issues of major public concern.''
Ladenburg spokesman Paul Caminiti said the firm will fight what he termed a ``meritless'' lawsuit by the bank.
The former regulator of IndyMac Bancorp Inc., which was seized by U.S. authorities on July 11, said the media has ``stoked public fears'' about banks by interviewing customers at those deemed at risk of collapse by analysts and research firms.
Television Stations
News stories, especially by television stations, based on lists compiled by analysts, threatened to damage healthy banks and derail efforts to rescue troubled ones, John Reich, director of the Office of Thrift Supervision, said today at an American Bankers Association meeting in Orlando, Florida.
In the BankAtlantic case, Bove characterized his comments as ``my personal views'' and labeled the report as opinion. The bank is referred to in two charts included in the report.
BankAtlantic said in the statement that it's ``well capitalized,'' that its ratio of non-performing loans to total loans is 1.25 percent and that its ratio of non-performing loans to capital and reserves is 12.5 percent.
The bank alleged that Bove took data provided by a research firm on bank and thrift holding companies, and ``asserted and implied that holding company data represented the financial condition of insured subsidiaries.''
The lawsuit comes as the Securities and Exchange Commission has subpoenaed Wall Street's biggest firms seeking trading records and e-mails, according to a person familiar with the situation.
New Front
The subpoenas mark a new front in the broadest U.S. investigation of Wall Street trading since state and federal regulators targeted mutual-fund abuses in 2003. The SEC issued an emergency order curtailing short selling in financial stocks, including Lehman Brothers Holdings Inc. and mortgage-finance companies Fannie Mae and Freddie Mac.
Kevin Goering, a defamation specialist at law firm Sheppard Mullin Richter & Hampton in New York, said the Bank Atlantic lawsuit may be an ``uphill battle'' for the bank. ``The bank will have to show actual malice because it's a public figure.''
Columbia Law School securities professor John Coffee said the BankAtlantic lawsuit is ``exactly what the First Amendment is there to preclude.''
BankAtlantic rose 21 cents to $1.89 in New York Stock Exchange composite trading. The holding company, Fort Lauderdale- based BFC Financial, rose 4 cents to 62 cents.