The Complaint brought forth violations of the Employee Retirement Income Security Act of 1974 (commonly known as “ERISA”) on behalf of Plaintiffs who were employees of Orion Bancorp, Inc. and its wholly-owned subsidiary, Orion Bank, Inc. (collectively, “Orion,” the Bank, or the Company) and certain of its executives to recover losses to the Orion Employee Stock Ownership Plan (the “Plan”) suffered by Plaintiffs who acquired Orion stock during the Class Period.
In a stunning fall from grace, Orion—once considered a fast-rising, stable and promising financial institution—crumbled beneath an unsupportable mountain of loan losses that eliminated the Bank’s earnings, depleted its capital, and ultimately led the Florida Office of Financial Regulation to close the Company and appoint the Federal Deposit Insurance Corporation as receiver. Orion’s stock was substantially overvalued and in danger of having no value at all since the Bank had adopted unsound and improper business practices.
Specifically, the Complaint alleged: (1) that as a direct result of Defendants’ course of conduct, Orion was taken over by the Federal Deposit Insurance Company (“FDIC”) on November 13, 2009; (2) due to the Defendants’ breaches of fiduciary duty, the Plan suffered massive losses on its investment in Orion Stock; (3) the Plan participants lost a substantial portion, if not all, of their retirement savings ; and (4) Plan fiduciaries failed in protecting the Plan Participants accounts. As of December 31, 2007, more than 96% of the Plan’s assets—$33,666,319—was invested in Orion Stock. Where shares of Orion Stock were valued during the Class Period as high as $48.00 per share on September 30, 2007, and $55.00 on December 31, 2008, in reality the stock was utterly worthless as the Defendants caused the Company to adopt undisclosed business and lending practices that ultimately led to Orion’s downfall. Plaintiffs were also pressured by the Bank to place their investments in the Company’s stock. Indeed, led by the Bank’s Chief Executive Officer, Orion embarked on a strategy to maximize short-term revenue (to which the CEO’s lofty bonuses were tied) at the expense of the long-term stability of the Bank.
On August 11, 2010, Plaintiffs filed an Amended Complaint. After Defendants’ Motions to Dismiss were fully brief, the Court denied in part Defendants’ motion on September 26, 2011, finding the Complaint adequately alleged the Defendant-CEO breached his fiduciary duties by failing to place the interests of Plaintiffs ahead of his own, causing the Plan to go into debt, and by making materially misleading statements to Plaintiffs.
On November 13, 2012, the parties participated in an all-day mediation that resulted in an agreement to settle the action for a monetary payment of $175,000 for the benefit of the Class. On February 11, 2013, the Court preliminarily approved the settlement, and then on July 16, 2013, entered final judgment finding the settlement to be fair, reasonable and adequate in all respects.
