BOSTON – The Securities and Exchange Commission asked a federal judge yesterday to enforce subpoenas against 14 depositors of New Haven Savings Bank who may have acted as "straw buyers" of hot mutual savings bank conversions to publicly traded banks.
The securities regulator has sued as many as a dozen speculators who reaped illegal profits from the initial public offerings of mutual savings banks--at least eight of them converted credit unions--with several speculators already headed to jail.
New Haven Savings Bank, now called NewAlliance Bancshares, was one of the hottest IPOs when it went public in 2004, earning depositors and outside investors who were lucky enough to get in on the deal millions of dollars in fast profits as the stock shot up. But investigators found that the deal and dozens of other MSB conversions were marked by manipulation, with, among other things, investors who used nominee buyers and others to obtain more than their allotted share of the offerings.
Investigators found that the 2002 IPOs for PacTrust Bancorp (Pacific Trust FCU) and Synergy Financial Group (Synergy FCU); the 2003 IPO for Rainier Pacific Financial Group (Rainier Pacific CU); 2004 IPOs for Citizens Community Bancorp (Citizens Community FCU) and K-Fed Bancorp (Kaiser Permanente Employees FCU); the 2005 deal for Heritage Financial Group (AGE FCU) and the 2006 IPO for Viepoint Bank (Community CU) were all rife with the same kind of schemes.
The SEC subpoenas allege the 14 New Haven Savings depositors were nominees paid by an entity known as Old Financial LLC, a North Dakota limited liability company and whether such an agreement was struck to circumvent federal securities laws.
