According to a press release dated April 15, 2010, the complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding the Company’s business and financial results and engaged in improper behavior which harmed Frontier’s investors by failing to disclose the extent of seriously delinquent commercial real estate loans and construction and land loans. The Company also failed to adequately and timely record losses for its impaired loans, causing its financial results and its Tier 1 capital ratio to be materially false. As a result of defendants’ false and misleading statements, Frontier stock traded at artificially inflated prices during the Class Period, reaching a high of $186.00 per share on September 19, 2008.
In July 2008, the Federal Deposit Insurance Corp (“FDIC”) and the state of Washington’s Department of Financial Institutions (“DFI”) conducted an investigation into Frontier’s banking practices and cited Frontier with engaging in certain “unsafe and unsound” practices. In March 2009, Frontier entered into a cease-and-desist order with banking regulators and agreed to take certain corrective actions related to the findings of the July 2008 report by the FDIC and DFI.
Then on March 16, 2010, after the market closed, Frontier announced that it had received a Supervisory Prompt Corrective Action Directive from the FDIC. The FDIC warned that the Company was “critically undercapitalized” which could lead to Frontier being placed into conservatorship or receivership, raising doubt about the ability of the Company to continue as a going concern. Frontier further restated its previously announced fourth quarter and year end 2009 results as the FDIC determined that Frontier’s loan loss provision and its valuation adjustment of other real estate owned were understated by $30 million and $3.5 million, respectively. On this news, Frontier’s stock dropped $1.35 per share to close at $2.89 per share on March 17, 2010, a one-day decline of nearly 32%, on volume of 710,400 shares, and a decline of 98% from the stock’s Class Period high.
According to the Order, signed by Judge John C. Coughenour, on August 3, 2010, the Court hereby orders that the above-captioned securities class action lawsuits be consolidated as a single action, hereafter James Hammer, et al., v. Frontier Financial Corporation, et al., Case No. 10-0643-JCC. All future filings shall be submitted under this caption only. Plaintiff James Hammer’s motions for appointment as lead plaintiff and for approval of counsel are granted. The Consolidated Complaint was filed on October 15, 2010, adding the Chief Credit Officer as named defendant in the action. On December 16, 2010, the defendants responded by filing a motion to dismiss the Consolidated Complaint.
On September 7, 2011, Judge John C. Coughenour granted the defendants' motion to dismiss the complaint. Plaintiff may amend the complaint within 20 days, which they did on October 14, 2011. The defendants responded by filing a motion to dismiss on November 18, 2011.
On April 20, 2012, Judge John C. Coughenour granted the defendants' motion to dismiss the complaint. The Clerk was directed to close the case.
On December 27, 2012, the United States Court of Appeals for the Ninth Circuit issued an Order granting appellant's motion to dismiss this appeal voluntarily with prejudice.