A Texas investor has filed a suit against former top executives at a failed Tennessee bank seeking to recover the nearly $1.2 million he pumped into the bank during a 2010 stock sale.
The investor, Donald Carter, alleges in a suit filed in federal court last week that executives at Tennessee Commerce Bank misled him about the bank's financial condition during the time the stock sale, the Nashville Business Journal reported Monday. If Carter had been aware of Tennessee Commerce's "true financial condition, he would not have bought the company stock," the lawsuit said.
Tennessee Commerce, based in Franklin, failed in January and was taken over by Republic Bancorp (RBCAA) of Louisville, Ky. The bank, which had $1.2 billion of assets at the time of its collapse, became critically undercapitalized in late 2011 after suffering steep losses on equipment loans and leases it originated both within and outside of its markets.
The suit is seeking damages from four of the company's top executives, including Chairman, President and Chief Executive Mike Sapp. It says their claims at the time of the stock sale that the bank would weather the financial crisis could not have been true given the bank's financial health and the mounting pressure it was facing from regulators, the Nashville Business Journal reported.
Including Carter's investment, Tennessee Commerce raised $24 million of capital in August 2010.