Bloomberg BNA covered the recent development in a case involving Gardere's client, a former bank officer for Franklin Bank Corp. In ruling on the defendants' motion for partial summary judgment, U.S. District Court Judge Lynn Hughes eliminated the Securities and Exchange Commission's request to bar former officers of the failed bank, Anthony Nocella and Russell McCann, from serving as a director or officer of a publicly traded company in the future. The SEC sued Mr. Nocella and Mr. McCann in April 2012, alleging they schemed to overstate Franklin Bank's earnings in 2007 to hide its loan losses. The court found that while the accounting was improperly handled, the bank officers acted with no intent to defraud Franklin's shareholders and that their attempts to manage the struggling bank during a recession appear to be in good-faith.
"It is abusive to seek a permanent bar against two executives who were working for a troubled company in a troubled time without adequate evidence that they were responsible for the improper accounting," wrote Judge Hughes.
Mr. Nocella is represented by Gardere Partners James G. Munisteri, Thomas A. Hagemann, Orin H. Lewis and Marla Thompson Poirot. Mr. McCann is represented by another Houston law firm. A hearing on the remainder of the case is scheduled for Sept. 17.
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