Investors in Bank of New York Co. are starting to show signs of nervousness over the company's involvement in a money-laundering investigation.
Shares have dropped 6.8% since Wednesday, when Thomas A. Renyi, the chairman and chief executive officer, acknowledged a lapse in internal controls at the $68 billion-asset company, particularly in the Eastern European division.
Since Aug. 19, when the bank publicly acknowledged that it had been cooperating with law enforcement officials in the year-old money-laundering probe, shares have slipped 12%. Nine accounts at Bank of New York are under investigation as possible conduits for the transfer of up to $10 billion from Russia to other countries since the mid-1990s.
Analysts said Bank of New York's investors had been relatively patient in the early weeks of the scandal. The stock dropped 6% from Aug. 19 through Sept. 21, the day before Mr. Renyi's testimony. At the same time, the broad universe of bank stocks tracked by Standard & Poor's Corp. declined 13%.
But as Bank of New York's shares continued their decline from Sept. 22 through Monday, the Standard & Poor's bank index held steady.
Bank of New York closed Monday down 93.75 cents, to $32.3125. A spokesman would not comment.
Bank of New York has not been accused of wrongdoing.
Observers said the scandal has taken its toll on the bank's public image. "There is a concern that the bank is caught up in a situation that is out of their control," said Lawrence Cohn, an analyst at Ryan, Beck & Co. However, he and other analysts said the company's third-quarter earnings are expected to show characteristic strength in fee-income and expense control.
Meanwhile, four shareholders filed suit in federal court last week, demanding that Mr. Renyi and other top executives and board members pay damages to the company for alleged reckless management. It is a derivative suit in which shareholders sue officers and directors on behalf of a company. Any damages would be paid to the company and not shareholders.
A bank spokesman said Monday, "The suit is without merit. We intend to pursue a vigorous defense."