Saturday, March 8, 2003

Eighth law firm joins suit against Provident

By Jeff McKinney
The Cincinnati Enquirer

Cincinnati law firm Strauss & Troy has joined seven other law firms representing investors to file class-action lawsuits against Provident Financial Group Inc. and some of its top executives and board members.

The suits, all filed this week, came after Provident said Wednesday that it would restate profits for the last six years. The company said it overstated profits by $70 million since 1997 when it improperly accounted for nine auto-lease transactions.

The suits were filed on behalf of Provident investors who bought the bank's stock from mid-April 1998 to early March 2003. One suit covers the period from late March 1998 through early March 2003.

The suit by Strauss & Troy claims that the company overstated operating results by failing to properly account for certain off-balance-sheet transactions. Specifically, the suit said, Provident failed to properly account for auto financing leases, causing it to overstate earnings.

The company further said the transactions were improperly reported, as off-balance-sheet transactions, the suit says. Provident is restating operating results downward for the years 1997 through 2002.

In response to the disclosure, the Strauss & Troy suit said, the stock plummeted, going from $28.08 a share Tuesday to $22.46 Wednesday. The stock closed at $21.95 Friday, up 38 cents.

Provident's stock has lost about $285 million, or about 20 percent, of its market value since Cincinnati's second-largest locally-based bank made the announcement.

Jim Whitaker, executive vice president and general counsel at Provident, said the fact that lawsuits have been filed is not surprising, given the significance of the earnings restatement.

He said the earnings restatement, which Provident announced Wednesday, was the result of a mistake.

"We will be defending on the basis that the accounting errors were unintentional," Whitaker said.


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