Georgian Bank shareholders sue ex-CEO, chairman
A group of investors in the parent of Georgian Bank have filed suit against two former top officials claiming they failed to disclose important information about the bank’s condition before it spiraled out of control and was shut down in September 2009.
The suit filed July 22 in Fulton State Court claims Gordon Teel and Lynn Darby “negligently misrepresented” Georgian’s financial condition in the months before regulators closed the Atlanta-based bank. Teel is a former chairman of Georgian Bancorporation and was the bank's president and CEO. He resigned in July 2009 and was replaced as chairman by Darby.
Georgian Bancorporation shareholders Paul D. Wilkerson, R. Lynn Wilson and Marigene B. Doyal claim they relied on the defendants’ statements about the bank’s finances, and continued to hold their stock as its condition worsened.
The shareholders lost their investment the day the bank failed. They are seeking unspecified damages and attorneys’ fees.
Attorneys for Teel and Darby declined comment.
The shareholder suit is one of the few filed so far in Georgia against the directors or officers of failed banks. Many more are expected as investors seek to recoup losses from Georgia’s banking crisis.
The Federal Deposit Insurance Corp. is also contemplating legal action against leaders of some failed banks, in part, to recoup the fund that acts as a security blanket for consumers.
Most banks carry corporate liability insurance, but the coverage is often much less than the hit the government and investors feel from a failure. Georgian's failure cost the FDIC’s fund nearly $800 million.
Wilkerson and Wilson retired in 2003 as directors of Georgian after an investor group led by Teel took over the bank and turned it into a real estate lending powerhouse. The bank converted from publicly traded to privately held.
The suit says Teel and Darby failed to timely inform shareholders the bank’s portfolio was being battered by the economy, and later that it had been censured by regulators. The investors say they also were not notified a critical depositor, Reliance Trust, had put the company on notice that it was pulling more than $212 million in deposits out of the bank.
About the Author
J. Scott Trubey is the senior editor over business, climate and environment coverage at The Atlanta Journal-Constitution. He previously served as a business reporter for the AJC covering banking, real estate and economic development. He joined the AJC in 2010.
