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SEC Penalizes Banker for Concealing Loss with Misleading Information

A bank's misleading information about real estate loans was detrimental to inv

Financial services companies must ensure that they are keeping tabs on all their advisors, as a recent case involving a Florida banker demonstrates.

The Securities and Exchange Commission has issued a complaint against Alan B. Levan, the BankAtlantic Bancorp chairman and chief executive

Financial services companies must ensure that they are keeping tabs on all their advisors, as a recent case involving a Florida banker demonstrates.

The Securities and Exchange Commission has issued a complaint against Alan B. Levan, the BankAtlantic Bancorp chairman and chief executive who allegedly issued information to investors in 2007 that was misleading in an attempt to conceal the "deteriorating state" of the bank's real estate portfolio.

The bank itself was also named in the complaint. The SEC claims that Levan and the bank were aware that the loans in its real estate portfolio were crumbling, and were concerned that borrowers would not be able to pay their dues, yet they "publicly minimized" the risks when speaking with investors.

"This is exactly the type of information that is important to investors, and corporate executives who fail to make that required disclosure will face severe consequences," stated Robert Khuzami, director of the SEC's Division of Enforcement.

The lawyer representing the bank and Levan's holding company, Eugene Stearns, told The New York Time that the SEC was making a scapegoat of Levan and BankAtlantic. He added that all of the bank's regulators had agreed the risk classifications on loans should be kept private and said banking agencies and the SEC were currently engaged in a "war."