Class action attorneys filed shareholder lawsuits against First Union Corp. on Wednesday, accusing it of "false and misleading" statements about its operating results and integration of CoreStates and Money Store.
Schiffrin & Barroway of Bala Cynwyd, Pa., and Milberg Weiss Bershad Hynes & Lerach of New York filed suit in the Western District of North Carolina on behalf of shareholders who bought shares from Aug. 14 to May 24, the day before First Union last revised its earnings projections. First Union stock price has declined 20% since the period began.
Class actions against banks alleging misleading statements were common in the early 1990s, when real estate losses racked the industry, but have been rare in recent years as bank stocks soared. The Securities and Exchange Commission now requires companies to put disclaimers on their forward-looking statements.
First Union's stock has fallen as it backed away from its initial statements about its acquisitions. But "anyone who believed what they were projecting deserves whatever happened to them," said Bear Stearns analyst Sean Ryan. "This is a case of inept management, but that is not a crime."
First Union declined to comment on pending litigation.