BankAtlantic v. Bove

Wall Street analysts don’t appear to uphold ‘freedom of speech’ or a ‘boys on the bus’ mentality in the face of financial institutional lawsuits.

Andrew Martin and Louise Story at The New York Times have an insightful story on Richard Bove who Florida’s BankAtlantic sued after Bove warned the bank’s holding company faced collapse during the 2007-09 global financial crisis, although the bank was well securitised. BankAtlantic’s chairman and chief executive officer Alan B. Levan sued Bove for defamation and reputational damage to the financial institution.

Although the case was settled Bove paid over US$800,000 in legal fees. Some financial industry analysts and other institutions now view Levan’s decision as a strategic lawsuit against public participation designed — unsucessfully — to silence Bove. The unnamed BankAtlantic source has some very revealing observations about how Levan’s personality can trigger conflict: he can be combatative, dislikes personal criticism, “has a tendency to continue battles for too long”, and reacts to analysts’ “dissenting views” as chairman and chief executive officer.

BankAtlantic’s lawsuit offers Bove and other analysts several uncomfortable lessons. Professional societies for analysts refused to comment on the case nor to protect him. Bove claims that BankAtlantic either misunderstood or misframed his report’s title and subtitle. He was attacked despite the fact that the report valued BankAtlantic’s holding company rather than the bank. Levan may have targeted Bove due to the analyst’s visible media profile. A U.S. federal judge, hedge fund managers with expertise in debt securitisation, and other investors have also challenged Levan’s decision-making, track record, and feuds with other companies.

The NYT article also has a very interesting discussion of BankAtlantic’s corporate governance record, its holding structure and voting shares. BankAtlantic v. Bove case documents will be a ‘treasure trove’ for researchers who are interested in conflicts between C-level executives, financial analysts, and the specialist media outlets like Bloomberg and CNBC who cover them.