United Western Bancorp, Inc. (“Bancorp” or the “Company”) is a unitary thrift holding company headquartered in Denver, Colorado. During the relevant period, Bancorp operated United Western Bank (the “Bank”) as a wholly owned subsidiary.
According to the Complaint, this is a securities class action on behalf of all persons who acquired the common stock of Bancorp pursuant and/or traceable to a false and misleading registration statement and prospectus (collectively, the “Registration Statement”) issued in connection with the Company’s September 17, 2009 offering (the “Offering”). This action asserts strict liability claims under the Securities Act of 1933 (“1933 Act”) against Bancorp, its officers and/or directors, its auditors, and the investment banks which underwrote the Offering (collectively, the “Defendants”).
On September 17, 2009, Defendants consummated the Offering pursuant to the false and misleading Registration Statement, selling 20 million shares of Bancorp common stock at $4.00 per share, for proceeds of $80 million. Bancorp received additional gross proceeds of $7.8 million (1,961,325 shares issued at $4.00/share) as a result of the partial exercise of the over-allotment option to purchase additional shares granted to the underwriters. The Registration Statement incorporated, among other documents, Bancorp’s reported financial results and 10-K/A for 2008 and the reported financial results and 10-Q for the second quarter of 2009.
The true facts which were omitted from the Registration Statement were: (a) Bancorp’s mortgage backed securities (“MBSs”) and collateralized mortgage obligations (“CMOs”) were impaired to a far greater extent than the Company had disclosed; (b) Defendants failed to properly record losses for other than temporary impairment in Bancorp’s non-agency MBSs and CMOs; (c) The Company’s internal controls were inadequate to prevent the Company from improperly reporting its impaired assets; and (d) The Company’s capital base was not adequate in light of the impairment of its assets.
Bancorp ultimately announced multi-million dollar impairments in its investment securities portfolio, specifically in MBSs and CMOs, causing the price of its common stock to drastically decline. In turn, on January 21, 2011, the Federal Deposit Insurance Corporation (“FDIC”) was appointed as receiver for the Bank by the Office of Thrift Supervision under the Federal Deposit Insurance Act. The FDIC immediately sold the Bank to First Citizens Bank & Trust Company (“First Citizens”) of Raleigh, North Carolina. First Citizens began operating the Bank under a new name commencing on January 24, 2011. Bancorp common stock now trades for about $.02 per share and was delisted from NASDAQ on February 28, 2011.
According to the Order signed by Chief Judge Wiley Y. Daniel, the motion to appoint lead Plaintiff and approval of selection of Counsel was granted. MHC Mutual Conversion Fund, L.P. and Clover Partners, L.P. are appointed lead Plaintiffs and the law firm of Dyer & Berens LLP is approved as lead Counsel. On August 11, 2011, an amended Complaint was filed. The Complaint adds certain Defendants and counts to the allegations. The Defendants responded by filing motions to dismiss on September 26 and 27, 2011.
On March 8, 2012, a notice of voluntary dismissal without prejudice as to the Defendants was submitted by the Plaintiffs pursuant to Fed. R. Civ. P. 41(a)(1).
On December 19, 2012, the Court issued an order granting the motions to dismiss of certain Defendants with prejudice. On December 21, the Court issued a Final Judgment in this case. On January 18, 2013, Plaintiffs gave notice of their appeal of this decision to the United States Court of Appeals for the Tenth Circuit. The Court of Appeals affirmed the ruling of the District Court on August 25, 2014.
