The original complaint charges Levitt and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Levitt, together with its subsidiaries, operates as a homebuilding and real estate development company in the southeastern United States.
According to the complaint, on January 31, 2007, Levitt announced that it agreed to merge with BFC Financial Corp (“BFC”). Based on BFC stock’s closing price on the previous trading day, the proposed transaction valued Levitt stock at $14.41 per share - a premium of 32 percent over the closing price of $10.88 per share on the previous trading day. The complaint alleges that, during the Class Period, defendants issued materially false and misleading statements and failed to disclose: (i) that the Company’s Levitt and Sons subsidiary was in much worse financial condition than publicly represented. Levitt and Sons was saddled with excessive amounts of unneeded and overpriced land which would not be feasible to develop for some time. Furthermore, Levitt and Sons was struggling to complete projects it had already begun and in many instances was failing to complete construction of homes that it had already sold as it lacked the financial resources to follow through on its contracts; (ii) that as a result of the foregoing, the Company was materially overstating its financial results because it was failing to timely record an impairment in the value of its homebuilding inventory at Levitt and Sons. Although Defendants acknowledged the difficult housing market, their public statements failed to advise investors of the true financial condition of the Company; (iii) that the Company’s loans and advances to Levitt and Sons would not be recovered as the subsidiary lacked the financial resources to pay now and in the foreseeable future; and (iv) that Levitt and Sons was insolvent.
Then, on August 15, 2007, the Company announced that the merger agreement with BFC had been terminated, without giving any explanation. Upon this news, shares of the Company’s stock fell $0.79 per share, or over 21%, to close at $2.96 per share. Subsequently, on November 9, 2007, it was announced that Levitt and Sons filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.
On March 25, 2008, a motion to appoint lead plaintiff and counsel was filed by Robotti & Company. As a result, a response to the above mentioned motion to appoint lead plaintiff and counsel was filed on April 11, 2008 by several individuals. The court appointed lead plaintiffs and approved selection of lead counsel on July 7. 2008. On September 3, 2008 plaintiffs filed an Amended Complaint and later amended it on September 23, 2008. On October 30, 2008, the defendants filed a motion to dismiss the Amended Complaint. On August 10, 2009, Judge Donald L. Graham granted in part and denied in part the defendants’ motion to dismiss. The case is dismissed without prejudice as to one of the individual defendants. The plaintiffs have been given leave to file a Second Amended Complaint.
On September 18, 2009, the lead plaintiffs filed a Second Amended Complaint. On April 9, 2010, the plaintiffs filed a motion to certify the class, which was denied by the order entered on July 21, 2010. Plaintiffs were given leave to file an amended complaint by July 31, 2010, and on July 30, 2010, the plaintiffs filed a Third Amended Complaint. The defendants responded by filing a motion to dismiss the Third Amended Complaint on August 11, 2010.
A motion to substitute lead plaintiff was filed on August 30, 2010, and was granted the next day. Sullivan & Serwitz 401(K) Profit Sharing Plan is now appointed lead plaintiff, replacing Robotti & Company, LLC and Robotti & Company Advisors, LLC.
The plaintiffs filed a motion to certify the class on September 21, 2010. On September 29, 2010, the defendants' pending motion to dismiss was denied as moot. On April 13, 2011, a notice of settlement was filed with the court. The plaintiffs filed a motion to preliminarily approve the settlement on June 14, 2011.
On June 27, 2011, the settlement was preliminarily approved. The settlement is in the amount of $1,950,000 in cash. The Settlement Fairness Hearing was scheduled for September 28, 2011. On September 28, 2011, Judge Donald L. Graham approved the settlement, attorneys' fees and expenses, and dismissed the action with prejudice.