According to a press release dated September 08, 2009, the complaint alleges that Pacific Capital and certain of its senior executive officers issued materially false and misleading statements and/or concealed material information relating to the Company’s reserves for losses on its loan portfolio in violation of Exchange Act sections 10(b) and 20(a). The complaint also alleges that a stock analyst covering Pacific Capital issued a “buy” rating on the Company’s common stock despite knowingly or recklessly failing to conduct a standard analysis of Pacific Capital’s banking operations that would have revealed that it was not appropriate to issue a “buy” rating.
As alleged in the complaint, purchasers of Pacific Capital common stock during the Class Period were misled to believe that the Company was maintaining a strong allowance for loan losses which would enable it to absorb losses in its portfolio. As alleged in the complaint, defendants’ misstatements and omissions relating to Pacific Capital’s loan loss provision caused the Company’s common stock to trade at artificially inflated levels between April 30, 2009, when the Company reported that it maintained its loan loss provision at a very high level, through July 30, 2009, when the Company admitted that it had not adequately reserved for loan losses, had not applied a conservative reserve methodology, and needed to record an additional loan loss provision of $117 million. The “buy” rating issued by the analyst defendants on the Company’s common stock also contributed, as alleged, at certain times during the Class Period to the artificial inflation in the price of Pacific Capital stock.
The complaint alleges that investors who purchased the Company’s common stock at artificially inflated prices during the Class Period suffered damages when the truth about the Company’s financial condition was revealed to the market at certain times during the Class Period and the price of the Company’s common stock declined. According to the complaint, as the truth about the Company’s financial condition became known to the market, the price of the Company’s common stock declined from a closing price of $6.94 per share on April 30, 2009, to a closing price of $2.12 per share on July 31, 2009.
On September 29, 2009, a Notice of Dismissal pursuant Rule 41(a) or (c) F.R.Civ.P. was filed with the court dismissing only the defendant party by the name of Sandler O'neill Asset Management LLC.
On December 04, 2009, an order was granted: (i) Appointing the Pagano Family and Johnny Rios as lead Plaintiffs; (ii) Appointing Stull, Stull & Brody and Glancy Binkow & Goldberg LLP as lead Plaintiffs' counsel; and (iii) consolidating all related actions.
On April 07, 2010, this consolidated action was dismissed with prejudice in its entirety by final judgment order entered in favor of Defendants.