Magazine article American Banker

Thrift Delays IPO as Regulators Probe Alleged Proxy Fraud

Magazine article American Banker

Thrift Delays IPO as Regulators Probe Alleged Proxy Fraud

Article excerpt

WASHINGTON -- Flushing Savings Bank has abandoned its bid to sell $71.5 million in stock as federal regulators investigate charges that the thrift manipulated depositor votes, according to individuals familiar with the deal.

The $598 million-asset mutual announced today that it had postponed its initial public offering indefinitely. Flushing Savings also disclosed that the Office of Thrift Supervision is reviewing "alleged irregularities in connection with proxies voted" on the deal.

A contract employee who worked on the deal told regulators she was fired after overhearing a Flushing executive boast that he forged depositors' proxies in an effort to get enough votes for the conversion, a lawyer who worked on the deal, and another source familiar with the deal said.

Flushing senior vice president Frederick L. Pesce was heard "bragging over some drinks that he had personally forged proxies," the lawyer said.

Mr. Pesce did not return phone calls seeking comment. A Flushing spokeswoman, Anna Piacentini, refused to discuss "specific allegations or specific individuals,"

The contact employee, Page Tyler, worked for Flushing's Hartford, Conn.-based underwriter, Advest Inc. She could not be reached for comment. An Advest spokeswoman insisted Ms. Tyler was not fired, but resigned. She had been an associate in Advest's corporate finance area, providing support to the firms' investment bankers.

The OTS would not comment on its investigation. …

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