Cardinal Financial Corp. said a $3.5 million charge related to a disputed escrow transaction could force the $1.8 billion-asset McLean, Va., company to post a third-quarter loss.
In July, Cardinal was the escrow agent for Liberty Growth Fund LP’s purchase of $3.85 million of stock in Aims Worldwide Inc., a marketing and media consultant. But after receiving the funds from Liberty and disbursing them to Aims, Cardinal discovered that Liberty had stopped payment on its check.
A subsequent check from Liberty was rejected because of insufficient funds, Cardinal said Friday.
As a result of the rejection, Cardinal filed a lawsuit in the Fairfax County Circuit Court in August against Liberty and its principal, Philip A. Seifert. The suit seeks recovery of the funds and punitive damages. Cardinal has referred the matter to law enforcement officials, but it says it could be several months before the case is resolved.
Matthew Schultheis, a Ferris, Baker Watts Inc. analyst, downgraded Cardinal’s stock Friday to “neutral,” from “buy,” as a result of the developments.
Cardinal said it would release third-quarter earnings this month. Its stock fell 2.4% Friday, to $10.22 a share.
