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S.E.C. Charges Banker with Misleading Investors

A Florida banker who is known for tangling with his critics, including with a prominent bank analyst during the financial crisis, was charged by federal regulators on Wednesday with misleading investors about his company’s real estate portfolio as the housing market turned south.

Alan B. Levan, chairman and chief executive of BankAtlantic Bancorp, was accused of making misleading statements in public filings and on earnings calls in 2007 in order to hide mounting losses in much of the portfolio, which consisted of loans on large tracts of land intended for real estate development. The Securities and Exchange Commission complaint also names BankAtlantic Bancorp, the holding company for BankAtlantic, one of Florida’s largest banks.

The complaint says that Mr. Levan and the company committed accounting fraud when they “schemed to minimize BankAtlantic’s losses on their books by improperly recording loans they were trying to sell from this portfolio in late 2007.”

In a statement, Robert Khuzami, director of enforcement at the S.E.C., said that “BankAtlantic and Levan used accounting gimmicks to conceal from investors the losses in a critical loan portfolio.”

“This is exactly the type of information that is important to investors,” he said, “and corporate executives who fail to make that required disclosure will face severe consequences.”

Eugene Stearns, a lawyer for Mr. Levan and BankAtlantic’s holding company, said that the S.E.C.’s case was an example of “scapegoating” and that the company’s financial disclosures were adequate. He said that in the fall of 2007, the company voluntarily issued extra disclosures about the risk classifications of its loans and that even before that, the bank company was clear about its risk profile.

Mr. Stearns said that all of the bank regulators overseeing the company had taken the position that banks should not release details about the risk classifications on loans.

“There’s a war going on between banking agencies and the S.E.C.,” Mr. Stearns said, noting that bank regulators wanted less disclosure and the S.E.C., which watches out for investors in the public markets, wanted more.

This is not the first case of a bank executive blaming regulators. Michael W. Perry, the former chief executive of IndyMac, the failed California bank, is being sued by the S.E.C. and has also said in defense documents that some of his accounting decisions were approved by regulators.

Mr. Levan and BankAtlantic were featured in a 2010 New York Times article about the company’s battle with an analyst, Richard X. Bove. BankAtlantic sued Mr. Bove over a report he wrote at the height of financial crisis evaluating the health of a long list of banks, including the Florida bank. The report — titled “Who Is Next?” appeared just after IndyMac collapsed, and as bank investors fled from bank stocks.

Mr. Bove at the time said that he had to fight the suit to protect the interests of analysts to freely produce their research reports. The bank and Mr. Bove settled.

On Wednesday after the S.E.C. filed its case, Mr. Bove said he did not feel vindicated because he had $700,000 in legal fees. “There’s no vindication if all you did was walk away with a huge hole in your pocket,” he said.

According to the S.E.C. complaint, Mr. Levan knew in early 2007 that the loan portfolio had problems because borrowers were not able to make payments.

The complaint says that both Mr. Levan, who grew BankAtlantic into Florida’s second largest bank over a more than two-decade banking career, and the company knew that many loans had been internally downgraded to “nonpassing status,” reflecting deep concern by the bank. Nevertheless, BankAtlantic’s public filings for the first two quarters of 2007 made only general warnings about the dangers of Florida’s real estate downturn.

The problems were finally disclosed in the third quarter of 2007 when BankAtlantic announced an unexpected loss, causing its stock to drop 37 percent, the complaint says.

BankAtlantic said in November that it would sell its branches, some loans, and deposits to BB&T Corporation.

A version of this article appears in print on  , Section B, Page 4 of the New York edition with the headline: S.E.C. Charges Banker With Misleading Investors. Order Reprints | Today’s Paper | Subscribe

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