Magazine article American Banker

T. Rowe Price Suing Oppenheimer & Co. over Rights Offering for Failed Calif. Bank

Magazine article American Banker

T. Rowe Price Suing Oppenheimer & Co. over Rights Offering for Failed Calif. Bank

Article excerpt

Mutual fund giant T. Rowe Price has sued Oppenheimer & Co. for its role in underwriting Guardian Bancorp's unsuccessful rights offering last year.

Guardian Bancorp, which failed in January after it did not meet federal capital requirements, raised $19.7 million through the offering in late 1993 and early 1994.

But T. Rowe Price alleged in a lawsuit filed on March 23 in U.S. District Court for the Southern District of New York that Oppenheimer falsified the proxy and hid important facts from Guardian's investors.

The Baltimore-based fund company, which owned 3.6% of the Los Angeles bank, is seeking $1.01 million plus interest for the 450,000 shares and 450,000 warrants it bought from Oppenheimer last year.

"The registration statement (said) that Guardian had 'taken a number of steps aimed at reducing nonperforming assets, returning the company to profitability'. . . and that those steps had resulted from discussions with regulatory authorities," the complaint said. It was filed by the New York law firm of Pollack & Kaminsky.

"In actuality, Guardian had engaged in a series of duplicitous steps to circumvent the directives and demands of the regulatory authorities and to continue to operate through its prior management and to maintain many of its prior operations, policies, and procedure," the complaint added.

Like many California banks, Guardian, which was founded in 1981 and had roughly $500 million in assets when it failed, fell victim to the state's deep recession and real estate bust. …

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