Sterling Bancorp Inc. agreed to pay $12.5 million to settle a class-action lawsuit filed by the $3.1 billion Oklahoma Police Pension & Retirement System, alleging the bank violated federal securities laws and artificially inflated its stock price.
The settlement was approved April 16 in U.S. District Court in Detroit, a court filing shows.
The Oklahoma City-based pension fund first filed the class-action lawsuit in July on behalf of investors who had purchased Sterling Bancorp common stock beginning Nov. 17, 2017 through March 17, 2020.
The suit said the bank misled investors regarding its core product, the Advantage Loan Program, the success of which led to what the original court filing said was "exponential growth" of its stock price, according to the original court filing. As a result of what the original filing said were "widespread, major issues" with the ALP's loan origination process, the bank lost 10% of its workforce through terminations and resignations and became the target of a Department of Justice investigation into Sterling's residential lending practices.
"This settlement should put to rest one of several difficult matters that arose out of our former Advantage Loan Program and allow our team to continue to focus on working hard to resolve our outstanding compliance issues while prudently managing our credit metrics, capital and liquidity," said Thomas M. O'Brien, chairman, president and CEO of Sterling Bancorp, in a news release Monday from the firm.
Patrick T. Egan, partner at Berman Tabacco, attorney for the lead plaintiff, said his firm has no comment beyond court filings.