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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION CASE NO.: 08-CIV-22572 COOKE/BANDSTRA WATERFORD TOWNSHIP GENERAL EMPLOYEES RETIREMENT SYSTEM, individually and on behalf of all others similarly situated Plaintiffs, v. BANKUNITED FINANCIAL CORPORATION, et al., Defendants. ______________________________________/ ORDER GRANTING DEFENDANTS ORTIZ, LOPEZ AND CAMNER’S MOTION TO DISMISS CONSOLIDATED AMENDED CLASS ACTION COMPLAINT THIS MATTER is before me on Defendants, Ramiro A.
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  UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF FLORIDAMIAMI DIVISION CASE NO.: 08-CIV-22572 COOKE/BANDSTRAWATERFORD TOWNSHIP GENERALEMPLOYEES RETIREMENT SYSTEM,individually and on behalf of all others similarly situated  Plaintiffs ,v.BANKUNITED FINANCIAL CORPORATION, et al. ,  Defendants . ______________________________________/ ORDER GRANTING DEFENDANTS ORTIZ, LOPEZ AND CAMNER’S MOTION TODISMISS CONSOLIDATED AMENDED CLASS ACTION COMPLAINT THIS MATTER is before me on Defendants, Ramiro A. Ortiz ( Ortiz ), and Humberto L.Lopez’s ( Lopez ) Motion to Dismiss [D.E. 86], and Alfred R. Camner’s ( Camner ) Motion toDismiss [D.E. 88], the Consolidated Amended Class Action Complaint (“Complaint”) [D.E. 67].The matter has been fully briefed by the Parties, and I have reviewed the arguments, the record,and the relevant legal authorities. For the reasons explained in this order, Defendants’ Motionsto Dismiss are granted. I. B ACKGROUND This is a federal securities class action brought by Lead Plaintiffs, Louisiana MunicipalEmployees’ Retirement System and the Oklahoma Police Pension and Retirement System, on behalf of themselves and a putative class of other persons and entities (collectively “Plaintiffs”)who purchased Class A common stock ( stock ) of BankUnited between October 24, 2006 andJune 19, 2008 (the class period ). Plaintiffs seek remedies under Sections 10(b) and 20(a) of the  BankUnited is not a named defendant in this action based on its filing for Chapter 11 1  bankruptcy protection on May 22, 2009. (Compl. ¶ 18).-2-Securities Exchange Act of 1934, and Securities and Exchange Commission (“SEC”) Rule 10b-5. (Compl. ¶¶ 1, 266-280). Plaintiffs bring this action against three senior executive officers of BankUnited Financial Corporation ( BankUnited or the Company ) and its primary subsidiary,BankUnited FSB (the Bank ). During the class period, Defendant Camner, BankUnited’s 1 founder, served as Chairman of the Board and Chief Executive Officer; Defendant Ortiz wasBankUnited’s President and Chief Operating Officer; and Defendant Lopez was BankUnited’sSenior Executive Vice President and Chief Financial Officer. Camner, Ortiz, and Lopez arecollectively referred to in this Order as Defendants. Plaintiffs allege that during the class period Defendants embarked upon, andimplemented, an unlawful strategy for increasing BankUnited’s market value artificially. (Compl. ¶ 3). This unlawful strategy, the claim goes, consisted of Defendants’ repeatedassurances in public releases, statements, and reports as to BankUnited’s strict credit qualitystandards, conservative appraisal and underwriting practices, adequate loan loss reserve ratios,and strong capital position. Plaintiffs assert that these representations were misleading, andserved to conceal the unsound undertakings that increasingly characterized the Bank’s lending practices; namely, reliance on limited or no documentation loans, (Compl. ¶¶ 22, 23); anaggressive push to increase the volume of risky option ARM loans, (Compl. ¶ 25); pressure toapprove overstated appraisals, (Compl. ¶¶ 28-33); and failure to adequately reserve for probableloan losses, (Compl. ¶¶ 33-37). Additionally, Plaintiffs allege that Defendants falselyrepresented that their financial reports were in conformity with Generally Accepted Accounting  See generally Public Company Accounting and Investor Protection Act of 2002 ( Sarbanes 2 Oxley Act of 2002 ), Pub. L. No. 107-204, § 302, 116 Stat. 777 (codified in part at 15 U.S.C. §7241(a)) (requiring the principal officers of a public company to certify quarterly and annualreports).-3-Principles (GAAP), (Compl. ¶ 211), and that they provided false statements in their Sarbanes-Oxley Act (“SOX”) certifications, (Compl. ¶¶ 51, 60, 70, 79, 93, 107, 116). The specific 2 statements and business practices alleged by Plaintiffs are described in the following sub-sections, A–H. A. Fourth Quarter 2006 (“4Q 2006 ) and Full Year 2006 ( FY 2006 ) Results The Class Period begins on October 24, 2006, the day that BankUnited issued a pressrelease announcing record financial results for its fourth quarter (4Q 2006) and fiscal year (FY2006). (Compl. ¶ 44). Specifically, the Company reported FY 2006 net income of $83.9 million;earnings per share of $2.43; and a loan loss provision of $10.4 million. (  Id. ) This press releasealso noted that the Bank continues to maintain its strong capital position in excess of regulatoryrequirements. (  Id. ) In commenting on these results, Defendant Camner stated, [W]e’ve keptan unrelenting focus on credit quality, and that the Company had stringent credit standards that will position [BankUnited] well for the future. (Compl. ¶ 45). Furthermore, during aconference call that same day, Camner stated that the Company’s results were achieved with foresight and discipline to not waver in [the Company’s] credit standards or internal lendingguidelines. (Compl. ¶ 46). With respect to non-performing assets ( NPAs ) and non- performing loans ( NPLs ), Camner stated, we do not anticipate that our numbers relating tononperformings will necessarily get any higher. Defendant Lopez agreed with Camner’sstatements, and further represented that the Company’s mortgage products continued to meet the  The SOX certifications stated that the Form 10-K: (1) does not contain any untrue statement 3 of a material fact or omit to state a material fact necessary to make the statements made, in lightof the circumstances under which such statements were made, not misleading, (2) that thefinancial statements fairly present in all material respects the financial condition, results of operations and cash flows of BankUnited; and (3) that [a]ll significant deficiencies andmaterial weaknesses in the design or operation of internal control over financial reporting whichare reasonably likely to adversely affect [BankUnited's] ability to record, process, summarize andreport financial information were disclosed . (Compl. ¶ 51).-4-needs of educated borrowers while adhering to federal guidelines and maintaining [theCompany’s] strict underwriting and credit quality standards. (Compl. ¶ 47). The Company’sstock rose from $26.38 per share on October 24, 2006 to $27.78 per share at closing on October 25, 2006. (Compl. ¶ 48).On November 2, 2006, in its Form 8-K filing with the SEC, Defendants attached aninvestor presentation which claimed that the Company focused on a high quality credit culture and that BankUnited’s [u]nderwriting is performed at the fully-indexed rate. (Compl. ¶ 49).Additionally, the presentation stated that the Company had [n]o subprime loans, and that itfollowed a [s]trict [underwriting] process from start to finish, which included a [s]trictappraisal process. (  Id. ). Many of the same types of assurances made in its 4Q statements wererepeated on December 14, 2006 in the Company’s Form 10-K filing for FY 2006. (Compl. ¶ 50).Additionally, the Form 10-K for FY 2006 stated that the Company’s financial statements were prepared in accordance with GAAP (  Id. ), and it contained SOX certifications signed by Camner  3 and Lopez, (Compl. ¶ 51). The Company’s share price rose from $26.78 on December 14, 2006,to $27.13 at closing on December 15, 2006. (Compl. ¶ 51). B. First Quarter 2007 (“1Q 2007”) Results In its press release on January 22, 2007, the Company again announced record financial
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