UCBH Holdings Inc (NASDAQ: UCBH) Investor Securities Class Action Lawsuit 09/11/2009

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Company Name(s): 
UCBH Holdings
Case Name: 
UCBH Holdings Shareholder Class Action Lawsuit 09/11/2009
Case Status: 
Case Dismissed
Affected Securities
NASDAQ: UCBH
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
09/11/2009
Class Period Begin: 
01/24/2008
Class Period End: 
09/08/2009
Court of Filing: 
U.S. District Court for the Northern District of California
Deadline To File for Lead: 
11/10/2009
Case Dismissed: 
01/15/2016
Summary: 

January 15, 2016 - The court ordered that all claims that remain in these consolidated cases are dismissed without prejudice.

September 16, 2014 - The court ordered the case stayed in its entirety as to all parties until further order by the court, decision pending the conclusion of trial in United States v. Shabudin and Yu.

September 17, 2012 - The lead plaintiff filed a fourth amended consolidated complaint.

August 29, 2012 - The court granted in part and denied in part defendants' motion to dismiss.

June 18, 2012 - Another defendant filed a motion to dismiss.

May 10, 2012 - Another defendant filed a motion to dismiss.

February 23, 2012 - Defendants filed motions to dismiss.

January 9, 2012 - The lead plaintiff filed a third amended consolidated complaint.

July 29, 2011 - The lead plaintiff filed a second amended consolidated complaint on behalf of investors who purchased UCBH Holdings Inc (NASDAQ: UCBH) common shares between January 24, 2008 and September 8, 2009. The lead plaintiff alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between January 24, 2008 and September 8, 2009.

May 17, 2011 - The court granted defendants' motion to dismiss with leave to amend.

November 19, 2010 - Defendants filed motions to dismiss.

October 15, 2010 - The parties filed a stipulation of dismissal of a certain defendant without prejudice.

August 10, 2010 - The lead plaintiff filed an amended consolidated complaint.

January 27, 2010 - Lead plaintiff and lead counsel were appointed and all cases were consolidated.

November 10, 2009 - Lead plaintiff motions were filed.

September 30, 2009 - Cases were consolidated.

September 24, 2009 - Another investor filed a complaint.

September 22, 2009 - Another investor filed a complaint.

September 21, 2009 - Another investor filed a complaint.

September 11, 2009 - An investor in shares of UCBH Holdings Inc (NASDAQ: UCBH) filed a lawsuit in the U.S. District Court for the Northern District of California against UCBH Holdings Inc over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between April 24, 2008 and September 8, 2009.

According to the complaint the plaintiff alleges that UCBH Holdings Inc its former CEO and Chairman, Thomas Wu, and its former Chief Credit Officer, Ebrahim Shabudin, violated federal securities by issuing between April 24, 2008 and September 8, 2009 materially inaccurate financial statements to the investing public. The complaint alleges that UCBH Holdings Inc knowingly falsified its financial statements by concealing the rising level of loan losses and non-performing loans through a series of improper accounting tricks and outright deception of regulators and auditors.

UCBH Holdings Inc announced on May 12, 2009, that UCBH Holdings Inc was delaying the filing of its Quarterly Report with the Securities and Exchange Commission for the 2009 fiscal first quarter and, as a result of an ongoing assessment of the adequacy of its allowance for loan losses, additional general reserve provisions to its allowance for loan losses were possible, and that any additional provisioning would further increase its net loss for the quarter ended March 31, 2009. Shares of UCBH Holdings Inc declined more than 20%, to close on May 13, 2009, at $1.66 per share on heavy volume.

On March 16, 2009, UCBH Holdings Inc filed its Form 10-K for the year ended December 31, 2008 and issued a press release stating that it had recorded an additional loan loss provision of approximately $40 million in the fourth quarter of 2008. UCBH Holdings Inc 10-K form included a March 16, 2009 letter from the its auditors, KPMG LLP, stating that a material weakness in UCBH Holdings Inc’s internal control related to policies and procedures for monitoring and responding to certain financial reporting risks had “resulted in a material misstatement of UCBH Holdings Inc’s loan loss allowance and provision for loan losses as of and for the year ended December 31, 2008 that has been corrected prior to the issuance of the Company’s 2008 consolidated financial statements.” Then on April 23, 2009, UCBH Holdings Inc reported its first quarter 2009 financial results, including a net loss of $97 million, or $0.78 per diluted share, for the three months ended March 31, 2009.

The net loss was primarily attributable to a $178.5 million loan loss provision. On May 12, 2009, UCBH Holdings Inc filed a Notification of Late Filing with the SEC with respect to its Quarterly Report on Form 10-Q for the period ended March 31, 2009. UCBH Holdings Inc stated that it was unable to timely file the Form 10-Q because it had not completed its financial statements and, more specifically, the UCBH Holdings Inc assessment of the adequacy of the allowance for loan losses and the evaluation of potential goodwill impairment had not yet been completed. The Notification of Late Filing also stated as follows: “While the Company does not anticipate changes to its reported nonperforming asset levels, it is possible that the Company will make additional general reserve provisions to its allowance for loan losses at March 31, 2009. Any additional provisioning will further increase the Company’s net loss for the quarter ended March 31, 2009. A reasonable estimate of any such additional provisioning cannot be made until the ongoing assessment…is finalized.”

On May 20, 2009, UCBH Holdings Inc disclosed in a filing with the SEC that the management of the company had recommended to the Audit Committee of the Board of Directors, and the Audit Committee agreed, that its consolidated financial statements as of and for the year ended December 31, 2008, should be restated and that the previously disclosed consolidated financial statements, as well as the related reports from its independent registered public accounting firm for the period ended December 31, 2008, could not be relied on. Further, UCBH Holdings Inc stated as follows: “The restatement will result in material adjustments to the loan loss provision and related allowance for loan losses…” Also on May 20, 2009, UCBH Holdings Inc announced the postponement of its Annual Meeting of Shareholders scheduled for May 21, 2009 until the completion of the restatement of its consolidated financial statements for the year ended December 31, 2009.

And on May 12, 2009, the date of UCBH Holdings Inc disclosure that the allowance for loan loss might be increased, UCBH Holdings Inc’s publicly traded common stock declined $0.51 per share or about 20%, to close at $2.10 per share. The next day, May 13, 2009, UCBH Holdings Inc’s common stock declined an additional $0.44 per share, or about 21%, to close at $1.66 per share. Following the May 20, 2009 disclosure that UCBH Holdings Inc would be restating its consolidated financials for the year ended December 31, 2008, UCBH Holdings Inc’s common stock declined $0.08 per share, or about 5%, to close at $1.61. On September 8, 2009 UCBH Holdings Inc announced that its CEO Thomas Wu and its Chief Credit Officer Ebrahim Shabudin were resigning. UCBH Holdings Inc has also entered into a consent decree with the FDIC to remedy the accounting and regulatory problems. As a result of the accounting improprieties, UCBH Holdings Inc must restate its financial statements for each quarter and the full fiscal year of 2008 caused UCBH Holding Inc's stock price to fall significantly, damaging investors, so the lawsuit.

UCBH Holdings Inc had $13 billion in total assets in 2008. The shares of UCBH Holdings Inc (NASDAQ: UCBH) traded recently at $0.94 per share, down from a 52 week High of $9.98 per share, almost $15 per share in 2008, and over $20 per share in 2007.

UCBH Holdings Inc is located in San Francisco, California, is a bank holding company. UCBH Holding Inc conducts its principal business through its wholly owned banking subsidiary, United Commercial Bank (UCB), which makes up substantially all of its consolidated assets and revenues.