WSB Financial is the holding company for Westsound Bank. The complaint charges WSB Financial and certain of its officers and directors with violations of the Securities Act of 1933. The complaint also alleges that Mr Davidson – who acted as acted as ‘lead underwriter’ of the initial public offering (IPO) – violated the Securities Act. The complaint also alleged that, in connection with the IPO, defendants issued numerous materially false and misleading statements which caused WSB Financial’s securities to trade at artificially inflated prices.
As alleged in the complaint, the company’s registration statement for the IPO has failed to disclose that the company had been violating certain banking laws and regulations relating to the origination, administration and monitoring of construction and mortgage loans. Due to the company’s misleading statements, WSB Financial’s stock hit an intra-day high of $21 per share during the class period. According to the complaint, beginning in September 2007, a series of announcements and investigations into the company’s lending practices caused WSB Financial’s stock to plummet.
