This is a securities fraud class action lawsuit against Sterling Financial Corp. and certain present and former officers, employees, and directors of Sterling's wholly owned subsidiaries Equipment Finance LLC ("EFI") and Bank of Lancaster County, N.A.
The class action complaint alleges that certain officers and employees of EFI engaged in a sophisticated loan scheme to cause Sterling to issue materially false and misleading financial information to the investing public in order to artificially inflate Sterling's stock price in violation of federal securities laws. The class action complaint asserts that on April 30, 2007 Sterling announced that it expected to restate its previously issued financial statements for FY 2004 through and including FY 2006 in connection with certain accounting irregularities at its EFI wholly owned subsidiary. Sterling Financial announced that EFI's CEO and President had voluntarily relinquished his positions.
This adverse announcement caused to Sterling Financial's stock to fall nearly 19%. After market-close on May 24, 2007, Sterling Financial announced preliminary results from its ongoing investigation. According to the complaint, the investigation revealed evidence of a sophisticated loan scheme, orchestrated deliberately by certain EFI officers and employees over an extended period of time to conceal credit delinquencies, falsify financing contracts and related documents, and subvert established internal controls established by Sterling.
As a result Sterling Financial announced it terminated 5 employees at EFI and expected to take a cumulative after-tax charge of $145 million to $160 million to the Company's FY 2006 results. Further announcements on May 24, 2007 revealed the Company was halting its dividend. This announcement caused the Company's stock to fall nearly 40% on May 25, 2007.
Name (Stock Symbol)
Sterling Financial Corporation (STSA)
Sterling Financial Corporation is a commercial bank headquartered in Washington State.
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