Chattanooga-based CBL & Associates is facing another federal lawsuit alleging securities fraud.
The 47-page complaint seeking class action status was filed by the International Union of Painters & Allied Trades District Council No. 35 Pension Plan.
Other defendants are CBL officials Stephen Lebovitz, Farzana Mitchell and John Foy (now retired).
Officials from CBL said, "We have reviewed the plaintiff's complaint and strongly deny all of the allegations. We will vigorously defend against this frivolous suit."
The lawsuit is brought on behalf of all persons who purchased or otherwise acquired the common stock of CBL between Aug. 9, 2011, and May 24, 2016.
It claims that CBL officials "made numerous materially false and misleading statements and omissions to investors regarding CBL’s business and operations, including by (a) repeatedly assuring investors that the company was in compliance with the financial covenants and restrictions imposed by the company’s lenders; (b) describing the company’s purported successes in obtaining debt financing on multiple occasions without disclosing the highly significant details regarding how the Company succeeded in obtaining and maintaining that financing; (c) disclosing to investors the company’s and operating partnership’s representations to the company’s financiers that they were providing to them accurate financial information regarding the operating partnership’s unencumbered assets, including the income from and occupancy rates of those properties; and (d) assuring investors that the company required its employees to comply with applicable laws and regulations, including those prohibiting the provision of material non-public information to selected individuals.
"As a result of these false statements and/or omissions, CBL common stock traded at artificially inflated prices during the Class Period, reaching a high of $26.95 per share."
It says, "However, the facts that have become public over the past several months contradict the company’s representations during the Class Period." It cited an article by the Wall Street Journal that said the Securities and Exchange Commission was conducting a probe of CBL.
The suit says, "As a direct result of these revelations, CBL’s stock price fell by $1.19 per share, some 11.5 percent, from its closing price of $10.26 per share on May 24, 2016 to open at $9.07 per share on May 25, 2016 (the stock price would drop as low as $8.98 per share on May 25, 2016 before ultimately closing at $9.40 per share that day), and then lost another $0.46 per share (or 4.5 percent) on June 13, 2016, cumulatively representing over one hundred million dollars in losses to investors."
The suit was filed by attorneys Christopher Wood and Jerry Martin of Nashville.