Sterling Bancorp Officers and Directors Under Investigation for Misleading Statements
Schubert Jonckheer & Kolbe is investigating potential shareholder derivative claims on behalf of stockholders of Sterling Bancorp, Inc. (NASDAQ: SBT) related to the company’s statements regarding its Advantage Loan Program – formerly the company’s largest and most profitable line of business.
According to Sterling’s 2018 Form 10-K, the Advantage Loan Program was a product consisting of “one, three, five, or seven-year adjustable rate mortgages” offered to “underserved home buyers who have good credit, but may have limited credit history.” As of December 31, 2018, the Advantage Loan Program constituted 80% of Sterling’s residential loan portfolio.
On December 9, 2019, Sterling disclosed that it was suspending its Advantage Loan Program “in connection with an ongoing internal review of the program’s documentation procedures.” That announcement followed a June 21, 2019 disclosure that the company had entered into an agreement with the Office of the Comptroller of the Currency to enhance its anti-money laundering and Bank Secrecy Act compliance. In response to the company’s announcement of December 9, 2019, the price of Sterling’s stock fell 23% on heavy trading, wiping out over $100 million of market capitalization in a single day. The stock has continued to decline since.
On March 6, 2020, Sterling announced that it would not resume its Advantage Loan Program, disclosing that preliminary results from its internal review “indicate that certain employees engaged in misconduct in connection with the origination of such loans, including with respect to income verification and requirements, reliance on third parties, and related documentation.” Because of these issues, Sterling has not yet filed its 2019 Form 10-K and is currently out of compliance with Nasdaq’s listing requirements.
A securities class action pending against the company in the U.S. District Court for the Eastern District of Michigan alleges that Sterling’s officers and directors misled investors between November 17, 2017, the date of the company’s IPO, and December 8, 2019 about Sterling’s loan underwriting, risk management, and internal controls pertaining to its Advantage Loan Program.
We are investigating potential derivative claims based on harm the company has suffered as a result of potential breaches of fiduciary duty by the company’s officers and directors.
If you currently own Sterling Bancorp stock and wish to obtain additional information—or would like to participate in a potential shareholder derivative action—please complete the form below for a free legal consultation.
