The complaint accuses the defendants of violations of the Securities Exchange Act of 1934 by virtue of the Company's failure to disclose during the Class Period that one condition for its receipt of $550 million in funding from the government sponsored Troubled Asset Relief Program ("TARP"), the Company would first have to raise $300 million from outside sources. According to the complaint, on January 27, 2009, after the Company revealed the previously undisclosed condition, the value of Colonial's stock declined significantly.
On March 6, 2009, the Honorable Myron H. Thompson granted the motion to consolidate. According to the Order, the lead case is Dees v. Colonial BancGroup, Inc., et al, civil action no. 2:09cv104-MHT. All future filings by the parties and their attorneys should be in the Dees case only. On April 17, 2009, three additional actions were consolidated into the lead case.
According to a press release dated May 11, 2009, Labaton Sucharow LLP announced that the Firm has been appointed Lead Counsel in the securities class action litigation against Colonial BancGroup, Inc. (“Colonial” or the “Company”) on behalf of the Court-appointed Lead Plaintiffs State-Boston Retirement System, Norfolk County Retirement System, City of Brockton Retirement System, and Arkansas Teacher Retirement System (collectively, the “Public Pension Fund Group”). Lead Plaintiffs represent a class of purchasers of Colonial’s securities between January 23, 2008 and January 27, 2009, inclusive Period”). The case is pending in the Middle District of Alabama in front of the Honorable Myron H. Thompson.
On June 22, 2009, the lead plaintiffs filed a Consolidated Class Action Complaint. On August 28, 2009, Colonial BancGroup, Inc., filed a Notice of Suggestion of Bankruptcy. In September 2009, the defendants filed motions to dismiss the Consolidated Class Action Complaint. On December 2, 2009, a Standard Bankruptcy Order was entered dismissing defendant Colonial BancGroup, Inc. without prejudice. On December 9, 2009, PricewaterhouseCoopers filed a motion to dismiss. On March 12, 2009, the underwriters filed a joint motion to dismiss.
On March 19, 2010, the Court entered the Judgment signed by the Honorable Myron H. Thompson. According to the Order and Judgment, the 304 Joint Motion to Dismiss Without Prejudice is granted; (2) The "Tolled Underwriter Defendants" listed in said motion are dismissed without prejudice; (3) This case remains pending in all other respects. On May 14, 2010, Judge Thompson signed several orders denying the pending motions to dismiss. The defendants filed motions for reconsideration of the order which were later denied as moot.
On April 29, 2011, the plaintiffs filed a First Amended Class Action Complaint, amended the class period and adding the company auditor as a named defendant in the action. The underwriters and auditor defendants responded by filing motions to dismiss on August 1, 2011. Also that day, the plaintiffs and the officer and director defendants filed a Stipulation and Agreement of Settlement. The proposed settlement is in the amount of $10.5 million to be paid by insurance carriers.
The settlement was preliminarily approved on September 30, 2011.
According to a Notice Partial Class Action Settlement dated November 11, 2011, the litigation has been preliminarily certified as a class action for the purposes of a partial settlement only and that a partial settlement with the Settling Defendants, in the amount of $10,500,000 in cash, has been proposed by the Settling Parties. A hearing will be held before the Honorable R. David Proctor of the United States District Court for the Middle District of Alabama in the Frank M. Johnson United States Courthouse, One Church Street, Montgomery, AL 36104 at 1:00 p.m., on January 25, 2012, to among other things: determine whether the proposed Settlement should be approved by the Court as fair, reasonable and adequate; determine whether the proposed Plan of Allocation for distribution of the settlement proceeds should be approved as fair and reasonable; and consider the application of Lead Counsel for an award of attorneys' fees and reimbursement of litigation expenses. The Court may change the date of the hearing without providing another notice.