Beginning in September 2007, two class actions were instituted
on behalf of purchasers of NetBank common stock, alleging claims
against NetBank and certain of its officers and directors for
violations of the federal securities laws. By an Order of the Court
dated April 21, 2008, the Court consolidated the class actions
filed, appointed Robert A. Brown to serve as the Lead Plaintiff,
and appointed Berger & Montague, P.C. as Lead Counsel for the
Lead Plaintiff.
On July 3, 2008, the Lead Plaintiff filed a Consolidated and
Amended Class Action Complaint on behalf of the Class (the
"Complaint") against certain of NetBank's former officers and
directors, including defendants Douglas K. Freeman, James P. Gross,
Steven F. Herbert, Thomas H. Muller, Jr., Eula L. Adams and David
W. Johnson, Jr. Former NetBank director Catherine Ghiglieri was
also named as a defendant in the Complaint but was dismissed from
the litigation, by agreement between counsel for Ms. Ghiglieri and
counsel for Lead Plaintiff. The Complaint did not include NetBank
as a defendant because NetBank had by then filed for bankruptcy and
all further litigation against NetBank was stayed by the
protections afforded under the federal bankruptcy laws.
The Complaint alleges two bases for relief: (1) violation of §
10(b) of the Securities Exchange Act of 1934 and the related SEC
Rule 10b-5; and (2) violation of § 20(a) of the Securities Exchange
Act of 1934. The Complaint alleges, among other things, that the
Defendants artificially inflated the market price of NetBank common
stock by making false and misleading statements during the years
2005, 2006 and 2007, regarding the financial results, operations
and condition of the Company. Among other things, Plaintiff alleges
that NetBank publicly issued false financial statements of its
operating results and financial condition, as well as
misrepresentations concerning its business operations, including
its subprime mortgage exposure, deficient mortgage underwriting and
risk control practices, inadequate reserves and controls, failure
to comply with Generally Accepted Accounting Principles (GAAP) and
regulatory requirements, the departure of its outside auditor, its
inability to file accurate financial statements, its overstated and
unreliable book value, and its true financial condition and
results.
On August 7, 2009, the Court entered an Order certifying this
Litigation as a class action for purposes of trial. The Class is
defined as follows:
All persons who, during the period
March 16, 2005 through and including May 21, 2007, purchased or
otherwise acquired the publicly-registered common stock of NetBank,
Inc., held such stock as of May 21, 2007, and were damaged as a
result ("the Class").
Excluded from the Class are defendants Douglas K. Freeman, James
P. Gross, Steven F. Herbert, Thomas H. Muller, Jr., Eula L. Adams
and David W. Johnson, Jr. (collectively, the "Defendants"), members
of the immediate families of any Defendant, any entity in which any
of the Defendants has or had a controlling interest, any person or
entity affiliated with any of the Defendants, and the legal
representatives, heirs, successors or assigns of any of the
Defendants. The Court's August 7, 2009 Order also appointed
Robert A. Brown ("Lead Plaintiff" or "Plaintiff") as the Class
representative and designated the law firm Berger & Montague,
P.C. as Lead Counsel for the Class.
On July 27, 2011, the United States District Court for Northern
District of Georgia granted preliminarily approval of a $12.5
million cash settlement in In re NetBank, Inc. Securities
Litigation, (N.D. Ga. 1:07-cv-2298-TCB). The proposed
settlement is on behalf of all persons who purchased the
publicly-registered common stock of NetBank, Inc. during the period
beginning March 16, 2005 through May 21, 2007, and held those
shares on May 21, 2007.
You can learn more about the proposed settlement by reviewing
the documents posted to this web page in the sidebar to the right
or by going to the dedicated website.
The following documents are available for download and
review: