Clash of Florida bank titans: When an independent analyst took on a take-no-prisoners CEO
Wake up and good morning. What happens when two in-your-face business personalities clash? One such war has been under way in Florida in recent years between very independent bank analyst Richard X. Bove (photo, left) in Lutz (north of Tampa) and take-no-guff Alan B. Levan (photo, below right), CEO of BankAtlantic Bancorp of Fort Lauderdale. Their conflict was chronicled in detail in Sunday's New York Times under the headline The Loneliest Analyst which refers to Bove's strong opinions about the banks he covers has left him with little backing from his fellow bank analysts on Wall Street. Especially since BankAtlantic's Levan sued Bove a few years ago, accusing him of defamation after he wrote a report about the banking industry in July 2008, just as the financial crisis was starting to boil over. The bank contended that the report falsely suggested that the institution was in trouble.
As the story notes, the BankAtlantic v. Bove case was settled three months ago without Bove paying a dime to BankAtlantic. Still, the story says, "it was hardly a resounding victory for Mr. Bove or, for that matter, freedom of speech on Wall Street, where some say the need for independent, probing voices has never been more apparent." Translation? Wall Street analysts used to have backbones and strong opinions but, in a majority of cases, their independence was severed by the investment banks they worked for when it was decided too many critical comments about a company or bank was undermining potentially lucrative underwriting opportunities. In other words, Wall Street firms dismantled the Chinese Wall that protected analysts and let them speak honestly without fear for their jobs. That is one reason Bove resides and works in Lutz, far from southern Manhattan.
"Although Mr. Bove is among the best-known analysts on Wall Street, most of his colleagues deserted him after BankAtlantic filed its suit. None of the professional associations that represent analysts or the securities industry rallied to his side, and his employer ultimately abandoned him," the Times story says.
Oh yeah. Bove, 69, is also stuck with nearly $800,000 in legal fees. "Even though from a legal standing I won, from a real-world point of view I lost big," he told the newspaper.
Levan, 65, told the New York Times that he filed his suit against Bove to protect his bank’s reputation. "In the last three years, every business in America has been under extreme pressure because of the economy... When rumors begin that are inaccurate or portray a business in a light that is not true, then, in times of stress, companies need to correct those misconceptions immediately because otherwise it can become quite dangerous."
Now BankAtlantic gets a mediocre "2-star" rating (0-star is terrible and 5-star is tops) these days by Bauer Financial, a Florida firm that banks hate but which does a reasonable job of assessing the health on a quarterly basis of financial institutions. There are dozens of Florida banks (mostly smaller than BankAtlantic) that are in worse shape.
But BankAtlantic is actively contracting to shore up its balance sheet. A Wall Street Journal article notes the BankAtlantic is in the process of selling 19 branches in the Tampa Bay area. It recently cut 7 percent of its workforce and announce plans to raise fresh capital, filing a prospectus with the Securities and Exchange Commission this month to sell as much as $125 million of stock.
Bove’s former employer, the investment bank Ladenburg Thalmann, chose to settle its end of the case by paying BankAtlantic $350,000, without admitting to any wrongdoing, says the New York Times. That left Bove to defend himself. He said he quit the firm in February because of disagreements over the lawsuit. Bove, still a frequent commentator on CNBC, now works for Rochdale Securities.
-- Robert Trigaux, Times Business Columnist