Goldman Scarlato & Karon, P.C. Announces Investigation of Smithtown Bancorp, Inc.
05 Marzo 2010 - 11:02AM
Business Wire
Goldman Scarlato & Karon, P.C. announces that it is
investigating potential violations of federal securities laws
against Smithtown Bancorp, Inc. (“SBI” or the “Company”) (NASDAQ:
SMTB), relating to the Company’s alleged scheme to fraudulently
inflate its financial results by materially understating its loan
loss reserves.
An action has been filed on behalf of investors who purchased
SBI common stock between March 13, 2008 and February 1, 2010 (the
“Class Period”), for violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934.
The action alleges that SBI failed to value certain assets at
their true fair value by improperly delaying the recognition of
asset impairments in order to inflate its reported income and asset
quality. The Company’s internal and disclosure controls were also
materially deficient - SBI failed to manage its asset quality,
credit administration, and loan and appraisal review processes. In
addition, the action alleges that the Company maintained a
commercial real estate loan concentration that was not commensurate
with its business strategy.
On February 1, 2010, the Company reported a loss of $19.8
million for its fourth quarter. Operating earnings were more than
offset by a $38 million loan loss provision and a $7 million
write-down of real estate owned. SBI also announced that it entered
into a Consent Agreement with the Federal Deposit Insurance
Corporation and a parallel Consent Order with the New York State
Banking Department, which require SBI to improve credit
administration, loan underwriting, loan underwriting, and internal
loan review processes, and maintain an adequate allowance for loan
losses.
In response to this news, the Company’s shares declined $0.81
per share, or 15%, to $4.60 per share. As a result of SBI’s
undisclosed misconduct and the fallout when the truth was revealed
through a series of partial disclosures throughout the Class
Period, SBI’s shares lost 77.9% of their value during the Class
Period.
If you bought Smithtown Bancorp, Inc. securities between March
13, 2008 and February 1, 2010, you may move to serve as Lead
Plaintiff. Lead Plaintiff motion papers must be filed with the
United States District Court for the Eastern District of New York
no later than April 26, 2010. A lead plaintiff is a court-appointed
representative for absent class members. You do not need to seek
appointment as lead plaintiff to share in any class recovery in
this action. If you are a class member and there is a recovery for
the class, you can share in that recovery as an absent class
member. You may retain counsel of your choice to represent you in
this action.
If you have information or would like to learn more about these
claims, or if you wish to discuss these matters or have any
questions concerning this announcement or your rights or interests
with respect to these matters, please contact Mark S. Goldman,
Esquire, of Goldman Scarlato & Karon, P.C., 101 West Elm St.,
Suite 360, Conshohocken, Pennsylvania 19428 by telephone at (484)
342-0700, Toll Free at 888-668-4130, or by email to
info@gsk-law.com or visit our website at http://www.gsk-law.com
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