Court Appoints BR&B Clients and BR&B to Lead First NBC Bank Holding Company Securities Case
8/26/2016 - In a securities class action against First NBC Bank Holding Company and its senior executives, Judge Kurt D. Engelhardt of the U.S. District Court for the Eastern District of Louisiana appointed an Institutional Investor Group— consisting of BR&B client Oakland County Employees’ Retirement System and Voluntary Employees’ Benefit Association, Plymouth County Retirement System, and BR&B client Central Laborers’ Pension Fund— as the lead plaintiff and appointed BR&B as the sole lead counsel for the case.
First NBC, which had its initial public offering of stock in May 2013, is a bank holding company that through its wholly owned banking subsidiary, First NBC Bank, offers a range of financial services to customers located primarily in the Central Business District of New Orleans and along the Mississippi Gulf Coast. Beginning on February 1, 2016, First NBC made a series of public disclosures that brought into question the accuracy of the company’s prior financial statements from the time of the company’s IPO and through 2015. Following the disclosures, which resulted in the price of First NBC stock falling nearly 40%, a First NBC investor filed a complaint asserting a number of claims on behalf of investors who purchased First NBC shares from May 10, 2013 through April 8, 2016. Specifically, the complaint alleges that First NBC and its senior executives violated the federal securities laws by issuing false or misleading financial statements that, among other things, improperly accounted for the company’s Federal and State Historic Rehabilitation tax credit entities and did not properly account for the company’s exposure to the oil and gas industry. The complaint also alleges that First NBC lacked effective internal and reporting controls and that its financial statements were not prepared in accordance with Generally Accepted Accounting Principles (GAAP).
On July 5, 2016, BR&B and its co-counsel filed a motion seeking to have the Institutional Investor Group appointed as the lead plaintiff for the case, and to have their counsel approved as lead counsel. Another investor with a far smaller loss than the group, but with a slightly larger loss than any individual member of the group, also sought to lead the case. On August 26, 2016, Judge Engelhardt issued a decision finding in favor of the Institutional Investor Group. Judge Englehardt concluded that the Private Securities Litigation Reform Act of 1995 (PSLRA) “permits the aggregation of individual plaintiffs and their losses” and found that the comparative size of the applicants’ financial interest weighed slightly in the Institutional Investor Group’s favor. Further, as we had argued in our opposition to the competing motion, Judge Engelhardt found that as of February 1, 2016, the time of the first alleged partial curative disclosure, the competing movant had not purchased any of its shares in First NBC, in contrast to the Institutional Investor Group, which had purchased 87% of its collective shares. Based on this, the Court found that the Institutional Investor Group’s claims are more typical of the claims of all putative class members, and the group is therefore “best fit to serve as lead plaintiff in this litigation.”
Turning to the lead counsel issue, Judge Engelhardt ruled that only one firm should be appointed as lead counsel, and “out of concern for the best interest of the class,” he appointed Barrack, Rodos, & Bacine as lead counsel, stating that the Court “will look to that firm to fulfill all responsibilities of lead counsel herein.”
Based on the decision, BR&B, our co-counsel and the lead plaintiffs will be continuing their investigation of the facts and circumstances surrounding First NBC, and will be filing an amended complaint as ordered by the Court.