BOFI court filing news

Just saw this article and it looks like encouraging news.

An October 30th BofI court filing confirms that regulators have not expressed any concerns regarding whistleblower Matthew Erhart’s allegations.

The filing is a memorandum in support of BofI’s motion for a preliminary injunction barring Erhart from disclosing the bank’s confidential information. The key statement is on page 2 of the memorandum:

Although Erhart has attempted to portray himself as a whistleblower, and avail himself of protections and financial benefits accorded to bona fide whistleblowers, neither the SEC, nor the OCC or any other agency has notified BofI of any concerns based upon the allegations against BofI he asserted in his complaint and previously asserted to them.

http://seekingalpha.com/article/3634516-bofi-court-filing-co…

I’ve been holding my large position and plan to continue.

Vivienne

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Mr Erhart, I predict will end up in jail. But some one will benefit from his actions and not go to jail. Such is the world we live in.
Bruce

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Mr Erhart, I predict will end up in jail.

As for the CEO, if he is lying, he is probably well protected by his employment contract. In case of a wrong doing, they will simply fire him and pay him a couple of million dollars to avoid a protracted legal battle.

No he will go to jail.

No one is going to jail as a result of the lawsuit filed by Erhart or the countersuit filed by BOFI. The case is a civil action after all, not criminal.

Although Erhart has attempted to portray himself as a whistleblower, and avail himself of protections and financial benefits accorded to bona fide whistleblowers, neither the SEC, nor the OCC or any other agency has notified BofI of any concerns based upon the allegations against BofI he asserted in his complaint and previously asserted to them. [from the BOFI court filing]

That’s kind of beside the point. BOFI could prove that there were no financial improprieties or securities violations and still lose the lawsuit. Erhart just has to show that he reasonably believed that there were illegal/improper practices and that he was terminated for reporting those practices. He also has claims for defamation and disclosure of medical information as a result of Garrabrant’s big mouth. From my legal perspective, it seems that BOFI is addressing things that go beyond the Erhart case. And that makes me more concerned about my investment than this single-plaintiff employment case.

Random
(a BOFI stock holder and a lawyer who happens to practice in this area of law)

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No one is going to jail as a result of the lawsuit filed by Erhart or the countersuit filed by BOFI. The case is a civil action after all, not criminal.

Random, I disagree with this statement. If Garrabrants is found to be lying to the OCC or the Sec they could bring him up on criminal charges and send him to jail.

Andy

Random wrote:

That’s kind of beside the point. BOFI could prove that there were no financial improprieties or securities violations and still lose the lawsuit. Erhart just has to show that he reasonably believed that there were illegal/improper practices and that he was terminated for reporting those practices. He also has claims for defamation and disclosure of medical information as a result of Garrabrant’s big mouth. From my legal perspective, it seems that BOFI is addressing things that go beyond the Erhart case. And that makes me more concerned about my investment than this single-plaintiff employment case.

From a competition litigator’s perspective:

I do not agree it is beside the point. It seems to me that Erhart’s lawsuit is beside. BOFI can win it, lose it, or settlement, and it won’t matter. Ultimately it is a whistler blower retaliation case, which is not much different from any other employment discrimination case. These cases are a dime a dozen. If they pay Erhart a few million, who cares? The collapse of the stock was not due to fear of exposure in Erhart’s case – it was due to the allegations themselves, particularly those emphasized by the New York Times. There was a feeling in the market that perhaps BOFI’s accounting can’t be trusted and, particularly after the calls, that its CEO is unreliable. He may be. But the most salient short-term fact in all of this (or rather, it seems to be a fact) is that the OCC and other regulators have already looked at Erhart’s allegations, and BOFI has been examined as thoroughly as it can expect to be, so that nothing is likely to come of the underlying allegations.

(As for the longer term, if you were given pause by the way the CEO sounded, or what happened with the transcript, and the leadership of the company is part of your thesis, then you may still have concerns.)

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