A North Carolina investor has filed a class-action lawsuit against Smithtown Bancorp Inc., alleging that the Hauppauge-based company deceived the investing public by issuing misleading statements and omitting information about the company's financial health.
Barroway Topaz Kessler Meltzer & Check Llp, of Radnor, Pa., said in a news release the lawsuit was filed Monday in the U.S. District Court in Brooklyn on behalf of those who purchased Smithtown Bancorp. Inc. securities between March 13, 2008, and Feb. 1, 2010. Feb. 1 is the day Smithtown Bancorp, parent company of the Bank of Smithtown, announced it had posted a fourth-quarter loss of $19.8 million and entered agreements with federal and state regulators to limit its lending and improve its financial strength.
Listed among the defendants are bank chairman, president and chief executive Bradley E. Rock, chief accounting officer Anita M. Florek, and the company's board of directors. Company officials were tied up in a board meeting Tuesday and unavailable for comment, said Judith Barber, corporate secretary.
The lead plaintiff, George R. Yourgal of Fayetteville, N.C., bought 1,000 shares of the company's stock between December 2009 and January, court documents state. Yourgal, who did not return phone calls for comment Tuesday, alleged in the lawsuit that the company failed to disclose "material adverse facts about the company's financial well-being, financial statements, operations and prospects."
His suit went on to claim that the company understated its loan loss reserves, failed to state certain assets at their fair value and delayed "recognition of impaired assets."
Adequate internal and financial controls were lacking, the suit also stated, and the company "engaged in unsafe and/or unsound banking practices," issuing financial statements that were not prepared in accordance with generally accepted accounting principles.
The allegations are similar to those in another class-action lawsuit filed last month by the upstate Waterford Township Police and Fire Retirement System. Since then, several other law firms have announced that they also are investigating whether the company misled investors.