The Law Firm is investigating United Community Banks, Inc. (“UCBI” or the “Company”) (Nasdaq: UCBI), during the period January 28, 2011 through January 6, 2012, inclusive, with respect to whether the Company and certain of its officers and directors have possibly violated the federal securities laws.
At the start of the Class Period (January 28, 2011 to January 6, 2012) defendants touted the Company’s improving financial condition, pointing to improving credit quality in United’s business. Although the housing market and general economy weighed on the Company’s performance, defendants told investors that United was quickly selling off and writing down problem assets in an effort to return United to profitability. But, what defendants misrepresented in their Class Period statements was that United was misrepresenting its financial condition in violation of Generally Accepted Accounting Principles (“GAAP”).
Specifically, on January 6, 2012, the Company revealed that it would be restating its financial results for the fourth quarter and full year 2010, as well as the first three quarters of 2011. In its announcement, United revealed, among other things, that it determined an additional income tax expense of $156.7 million and that a charge to other comprehensive income in shareholders’ equity of $10.2 million would be recorded to “establish a full deferred tax asset valuation allowance as of December 31, 2010.”
The restatement significantly worsened many of the Company’s reported financial results. For example, the Company’s fourth quarter 2010 net loss of $16.4 million will be increased by 955% to $173.1 million, or $9.25 per share. For the full year 2010, the net loss of $345.6 million will be increased by 45% to more than $500 million, or $27.09 million. Likewise, the restated results for the first quarter of 2011 will be a net loss of $237.3 million, or $13.00 per share, rather than the previously reported net loss of $142.5 million, or $7.87 per share, representing an increase of approximately 67%.
The true facts, which were known by defendants but concealed from the investing public during the Class Period, were as follows: (1) United’s financial results were materially understated for the fourth quarter 2010 and full year 2010; (2) United’s financial results were materially understated for the first three quarters of 2011; (3) United’s financial statements were not prepared in accordance with GAAP; (4) United’s financial guidance for 2010 and 2011 was misstated and lacked a reasonable basis when made; and (5) as a result of the foregoing, defendants’ Class Period statements regarding the Company’s financial performance and expected earnings were false and misleading and lacked a reasonable basis when made.
During the Class Period, during which the Company and its high-ranking executives made numerous false and misleading statements about United’s business and financial performance, the Company’s common stock reached a high of $13.55 per share on April 27, 2011. As a result of the Company’s surprising financial restatement, the price of United common stock fell more than 10%, or $0.75 per share, to close at $6.49 per share on January 6, 2012. All told, the impact of defendants’ fraudulent scheme caused the price of United stock to fall 52% from its Class Period high.
If you are a current shareholder and/or purchased your shares prior to Jan. 28, 2011 or during the class period of January 28, 2011 through January 6, 2012 and would like to discuss your options of exercising your rights as a shareholder, please contact us.
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