Murray, Frank & Sailer LLP Files Class Action Lawsuit Against UCBH Holdings, Inc.
NEW YORK (BUSINESSWIRE) -- MURRAY, FRANK & SAILER LLP has filed a class action complaint in the United States District Court for the Northern District of California against UCBH Holdings, Inc. (Nasdaq: UCBH) and certain of its officers and directors on behalf of shareholders who purchased UCBH common stock between April 24, 2008 and September 8, 2009, inclusive, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act").
UCBH operates as the bank holding company for United Commercial Bank, which provides personal and commercial banking services to small- and medium-sized businesses, business executives, professionals and other individuals, and primarily engages in generating deposits and originating loans.
The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act by making materially false and misleading statements to the investing public. Specifically, the defendants failed to disclose that: (1) loan terms were inappropriately modified, including the extension of terms, the lowering of interest rates, and the improper use of interest reserve accounts to delay negative consequences; (2) the Company had delayed the recognition of risk rating downgrades and specific reserves; (3) the Defendants misrepresented the credit risk of the Company's loan portfolio; (4) the Company failed to properly reserve for loan losses and record impairment losses on non-performing loans and other real estate owned assets; (5) Defendants misstated the Company's loan loss provision and related allowance, including charge-offs and the resulting change in non-performing loan levels; (6) the Company's financial results were not prepared in accordance with Generally Accepted Accounting Principles ("GAAP"); (7) the Company lacked adequate internal and financial controls; and (8) as a result of the above, the Company's financial statements were overstated and materially false and misleading at all relevant times.
On September 8, 2009, UCBH shocked the market when the Company disclosed the conclusions of an Investigation Subcommittee of the Board Audit Committee regarding the recognition of impairment losses on nonperforming loans and other real estate owned assets. According to the Company, the Subcommittee's report identified problems resulting both from weaknesses in the Bank's internal controls and from deliberate and improper actions and omissions of certain Bank Officers, and concluded that those problems were driven by an apparent desire to downplay deteriorating financial conditions by delaying or abating risk rating downgrades and minimizing the Bank's overall loan loss allowance. Moreover, UCBH disclosed that the report raised serious concerns regarding the actions of certain current and former officers at various levels of the Bank's management.
As a result of this news, shares of UCBH declined $0.17 per share, or 14.29%, to close on September 8, 2009, at $1.02 per share, on unusually heavy volume.
If you are a member of the class described above, you may move the Court, not later than November 10, 2009, to serve as Lead Plaintiff for the class. A Lead Plaintiff is a representative chosen by the Court who acts on behalf of other class members in directing the litigation. If you purchased UCBH common stock and wish to discuss this litigation, or have any questions concerning this Notice or your rights or interests with respect to these matters, please contact us.
MURRAY, FRANK & SAILER LLP
Brian D. Brooks