Sept 29 (Reuters) - BBX Capital Corp, a Florida company once known as BankAtlantic Bancorp, and its ex-chief executive have won a new trial in a lawsuit by the U.S. Securities and Exchange Commission accusing them of defrauding investors before the 2008 financial crisis.
The 11th U.S. Circuit Court of Appeals on Wednesday ruled that a lower court judge had improperly before a 2014 trial found ex-CEO Alan Levan’s statements on an earnings call related to the riskiness of its real estate portfolio were false.
The court also said a federal judge in Florida erred in preventing BBX and Levan from defending themselves against accounting fraud allegations by showing they had in good faith relied on auditors.
“Thus, we vacate and remand for a new trial in light of these errors,” the three-judge panel wrote.
BBX on Thursday said it welcomed the ruling, which overturned $4.55 million in penalties against the company.
The order also overturned $1.3 million in fines against Levan and a two-year ban on him serving as an officer or director, which had forced him to resign as CEO of BBX and its majority owner BFC Financial Corp.
“While the decision leaves open the possibility of a new trial, it decimates any ability of the SEC to win,” BBX counsel Eugene Stearns said.
An SEC spokeswoman declined comment.
The case, filed in 2012, arose from BankAtlantic loans made on large tracts of land intended for the development of single-family homes and condominiums. Florida was among the U.S. states hardest hit by the nation’s housing crisis.
The SEC contended BankAtlantic and Levan made misleading statements to investors to hide the deterioration of its real estate portfolio in 2007.
The SEC also contended the company and Levan committed accounting fraud by scheming to minimize BankAtlantic’s losses.
BankAtlantic was renamed BBX after selling its main banking assets in 2012 to North Carolina’s BB&T Corp.
The defendants denied wrongdoing. Levan in a statement on Thursday said he was “determined to clear my name and BBX’s name from the false claims that have been asserted in this case.”
The case is Securities and Exchange Commission v BankAtlantic Bancorp Inc et al, 11th U.S. Circuit Court of Appeals, No. 15-14629. (Reporting by Nate Raymond in New York; Editing by Meredith Mazzilli)