According to a press release dated April 1, 2009, a class action has been commenced in the United States District Court for the Southern District of New York on behalf of all persons who acquired the 8.875% Trust Preferred Securities of Regions Financing Capital Trust III (the “Securities”) (NYSE: RF-PZ) pursuant or traceable to a materially false and misleading registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with the April 2008 offering of the Securities (the “Offering”).
Specifically, the complaint charges Regions Financial Corporation (“Regions”), certain of its officers and directors, its auditor, and the underwriters of the Offering with violations of the Securities Exchange of 1933. Regions provides consumer and commercial banking, trust, securities brokerage, mortgage and insurance products and services.
The complaint alleges that in April of 2008, Regions consummated the Offering pursuant to the false and misleading Registration Statement, selling 13.8 million shares of the Securities at $25 per share for proceeds of $345 million. The Registration Statement incorporated Regions’ financial results for 2007. Then, on January 20, 2009, Regions issued a press release announcing a loss for the quarter and year ended December 31, 2008, including a loss for the quarter ended December 31, 2008 of $9.01 per diluted share, which was “largely driven by a $6 billion non-cash charge for impairment of goodwill.” As a result of this disclosure, the price of the Securities dropped significantly.
According to the complaint, the true facts which were omitted from the Registration Statement were: (a) the Company failed to properly record provisions for loan losses; (b) the Company failed to properly account for impaired assets; (c) the Company failed to properly account for goodwill; (d) the Company’s internal controls were inadequate to prevent it from improperly recording provisions for loan losses, improperly accounting for impaired assets, and improperly accounting for goodwill; and (e) the Company was not as well capitalized as represented.
On August 28, 2009, a first amended complaint for violations of the federal securities laws was filed with the court by the plaintiffs against the defendants. On November 02, 2009, a corrected version of the complaint was filed by the plaintiffs.
On May 10, 2010, the Defendants’ motions to dismiss the amended complaint for failure to state a claim were granted by the Court’s Memorandum Opinion. On May 11, 2010, the Court issued a subsequent order dismissing other defendants in the claim.
On May 17, 2010, The Court issued an Order dismissing this action against the defendants, granting the plaintiffs an opportunity to appeal.