Abraham, Fruchter & Twersky, LLP announces that a securities class action lawsuit has been filed in the United States District Court for the Eastern District of Missouri on behalf of all persons or entities that purchased the securities of Enterprise Financial Services Corp (“Enterprise Financial” or the “Company”) (NASDAQ: EFSC) between April 20, 2010 and January 25, 2012, inclusive (the “Class Period”), alleging violations of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 against the Company and certain of its officers (the “Complaint”).
Enterprise Financial, a Delaware corporation headquartered in Clayton, Missouri, provides banking and wealth management services to customers in the St. Louis, Kansas City, and Phoenix markets. The Complaint alleges that throughout the Class Period, defendants made materially false and misleading statements, and failed to disclose materially adverse facts about the Company’s business and prospects, including that: (i) the Company was improperly recording income on loans covered under loss share agreements with the Federal Deposit Insurance Corporation ("FDIC"); (ii) as a result, the Company's income was overstated; (iii) the Company's financial results were not prepared in accordance with Generally Accepted Accounting Principles; (iv) the Company lacked adequate internal and financial controls; and (v), as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times.
On January 25, 2012, after the close of trading, Enterprise Financial announced that its Annual Report on Form 10-K filed with the SEC for the 2010 fiscal year, and the interim financial statements included in its Quarterly Reports filed with the SEC on Form 10-Q for the first three fiscal quarters of 2010 and 2011, respectively, should no longer be relied upon. According to the Company, during these periods an error in the process Enterprise used to record income on loans covered under loss share agreements with the FDIC resulted in the overstatement of the Company's reported income. On this news, the price per share of Enterprise Financial common stock fell nearly 19%, or $2.92, to close on January 26, 2012 at $12.55, on unusually high volume.