Lerach Coughlin Stoia Geller Rudman & Robbins LLP Files Class Action Suit against Coast Financial Holdings, Inc.
March 26 2007 - 5:28PM
Business Wire
Lerach Coughlin Stoia Geller Rudman & Robbins LLP (�Lerach
Coughlin�) (http://www.lerachlaw.com/cases/coastfinancial/) today
announced that a class action lawsuit has been commenced in the
United States District Court for the Middle District of Florida on
behalf of purchasers of Coast Financial Holdings, Inc. (�Coast
Financial� or the �Company�) (NASDAQ: CFHI) who purchased the
publicly traded securities of Coast Financial between October 5,
2005 to January 25, 2007, inclusive (the �Class Period�), seeking
to pursue remedies under the Securities Exchange Act of 1934 (the
�Exchange Act�). If you wish to serve as lead plaintiff, you must
move the Court no later than May 21, 2007. If you wish to discuss
this action or have any questions concerning this notice or your
rights or interests, please contact plaintiff�s counsel, Samuel H.
Rudman or David A. Rosenfeld of Lerach Coughlin at 800/449-4900 or
619/231-1058 or via e-mail at wsl@lerachlaw.com. If you are a
member of this class, you can view a copy of the complaint as filed
or join this class action online at
http://www.lerachlaw.com/cases/coastfinancial/. Any member of the
purported class may move the Court to serve as lead plaintiff
through counsel of their choice, or may choose to do nothing and
remain an absent class member. The complaint charges Coast
Financial and certain of its officers and directors with violations
of the Exchange Act. The Company operates as the holding company
for Coast Bank of Florida (�Coast Bank�) that provides various
consumer and commercial banking services to individuals and small
to medium sized businesses in Manatee, Pinellas and Sarasota
counties in Florida. According to the complaint, in order to take
advantage of the housing boom and in particular the fast-growing
real estate market in Southwest Florida, Coast Financial partnered
with Construction Compliance Inc. (�CCI�) to lend money to
borrowers who would use the money to construct homes in that area.
The plan was simple: borrowers would put little money down and take
out construction loans in their name that CCI would then use to
construct the properties. CCI would then use the credit line to
construct the properties and pay the interest on the loans. Once
the construction was completed, borrowers would then sell the
property or �flip� it for a quick profit. Unbeknownst to
shareholders, however, by the start of the Class Period, Coast
Financial had materially increased its exposure to CCI and its
investors and had extended tens of millions of dollars of credit
for the construction of homes in Florida. Given the
then-deteriorating condition of the Florida real estate market, the
Company should have increased its loan loss reserves for this
segment of the business but did not. Throughout the Class Period,
defendants never disclosed all material facts about its
relationship with CCI, the status of CCI�s construction projects or
the Company�s increasing exposure to CCI. Furthermore, the Company
should have fully disclosed the true risks associated with this
line of business � there were little, if any, controls placed on
the CCI and its ability to withdraw money from Coast Financial.
Ultimately, CCI withdrew tens of millions of dollars and never
completed construction on many homes. Plaintiff seeks to recover
damages on behalf of all those who purchased the publicly traded
securities of Coast Financial between October 5, 2005 to January
25, 2007. The plaintiff is represented by Lerach Coughlin, which
has expertise in prosecuting investor class actions and extensive
experience in actions involving financial fraud. Lerach Coughlin, a
180-lawyer firm with offices in San Diego, San Francisco, Los
Angeles, New York, Boca Raton, Washington, D.C., Houston,
Philadelphia and Seattle, is active in major litigations pending in
federal and state courts throughout the United States and has taken
a leading role in many important actions on behalf of defrauded
investors, consumers, and companies, as well as victims of human
rights violations. Lerach Coughlin lawyers have been responsible
for more than $20 billion in aggregate recoveries. The Lerach
Coughlin Web site (http://www.lerachlaw.com) has more information
about the firm.
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