FOR IMMEDIATE RELEASE:
West Coast bank settles securities class action pending in the U.S. District Court
for the Central District of California.
Washington, D.C. – Opus Bank (NASDAQ:OPB) will pay $17 million to settle claims that the bank deceived investors about its lending practices. The settlement is subject to notification to investors and court approval. The suit alleges that Opus Bank underwrote risky loans, disregarded credit controls, and lacked adequate resources to monitor its loan portfolio, and hid this information from shareholders. News of the bank’s alleged misconduct resulted in dramatic declines in the price of Opus Bank’s stock, leading to substantial losses for investors, including the Arkansas Public Employees Retirement System (APERS), lead plaintiff in the class action.
“On behalf of the Arkansas Public Employees Retirement System and other members of the class, we are very pleased with this proposed settlement,” said Steven J. Toll, Co-Chair of Cohen Milstein’s Securities Litigation & Investor Protection practice group and lead counsel in the case. “The proposed settlement represents an excellent recovery for investors who we believe were injured due to their investments in Opus Bank,” added Daniel S. Sommers, Co-Chair of Cohen Milstein’s Securities Litigation & Investor Protection practice group, who also served as lead counsel.
In October 2016, reports began to emerge that Opus Bank’s loan portfolio and lending practices were far more risky than what had previously been disclosed to investors. In the ensuing months, as more information was disclosed, Opus Bank’s stock price dropped precipitously. Investors filed a lawsuit in February 2017 after sustaining heavy losses. APERS’ complaint, filed after its appointment as lead plaintiff, alleged that Defendants failed to disclose that: 1) Opus Bank’s credit culture was aggressive, not conservative; 2) Opus Bank’s underwriting standards were not stringent and the bank underwrote risky loans to entities with little to no cash flow or collateral; 3) Opus Bank’s credit controls were either disregarded or ineffective at identifying problem loans; and 4) Opus Bank did not have appropriate personnel and resources in place to monitor its loan portfolio or to establish proper loss reserves for the loan portfolio.
Opus Bank is a publicly chartered commercial bank, headquartered in Irvine, California with branches located in major metropolitan markets across California, Oregon, Washington and Arizona.
The case is Schwartz v. Opus Bank, No. 2:16-cv-07991-AB-JPR, in the U.S. District Court for the Central District of California.
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