Lawsuit Against Bank Directors Thrown Out Over Technicality

In a new case, the complaint was filed by a group of bank shareholders, attempting to plead a “holder claim” for damages incurred as a result of being induced by negligent misrepresentations to hold their bank stock rather than sell it before it became worthless.

With the proliferation of bank failures over the past several years, especially in Georgia, it is no surprise that lawsuits against the officers and directors of the failed banks are beginning to pop up. This type of suit is commonly referred to as a “holder claim.” However, these types of lawsuits require particular allegations be included in the Complaint as well as proof of specific facts. These suits are somewhat akin to a fraud claim in that the plaintiff must show that the defendant made misleading or false statements which induced the plaintiff to buy or hold bank stock.

The Complaint must allege that the defendant had direct, personal communication with the plaintiff. This means either a face to face meeting or a telephone conversation. In other words, the communication must be personal or unique to the plaintiff. A publicly disseminated stock forecasts will not satisfy the direct communication requirement. In addition, the Complaint must also allege specific reliance by actions, as distinguished from unspoken and unrecorded thoughts and decisions, that would indicate the shareholders actually relied on the misrepresentations.

The failure to include either of these allegations in the Complaint will result in a dismissal of the lawsuit, which is exactly what happened in Anderson v. Daniel, No. A11A2106, WL 414465 Ga.App. (February 10, 2012).