First Palm Beach Bancorp alleged in federal court this week that a shareholder group failed to publicly disclose its intentions before it lobbied management to sell the company.
The West Palm Beach, Fla., company, which owns First Federal Savings and Loan Association of the Palm Beaches, said an investment advisory firm and its clients did not make their intention to influence the company known to the Securities and Exchange Commission.
It said the investors should have filed SEC form 13-D, in which a large investor must declare its intentions. The form is intended in part to alert management and other shareholders of potential takeovers.
The company filed its lawsuit Tuesday in U.S. District Court for thc Southern District of Florida against Jenswold, King & Associates, a Houston-based investment advisory firm. Byron D. Aldridge Jr., an executive with the firm, and the customers of Jenswold who own about 12% of the thrift's stock were also named as defendants.
First Palm Beach is seeking to stop the defendants from purchasing additional shares until they fully comply with Securities and Exchange Commission disclosure laws.
"We were of the opinion they failed to disclose properly," said Louis O. Davis Jr., executive vice president of $1 billion-asset First Palm Beach.
Jenswold issued a statement saying it has complied with all federal securities laws with regard to First Palm and has made the proper filings.
"We have no intention of controlling the bank whatsoever," said Roger E. King, Jenswold's chairman and president, in an interview. "We will file whatever is required."
In its complaint, First Palm contended the defendants tried to influence the operations of the bank on several occasions. For instance, on May 26, Mr. A1dridge delivered a letter from his firm to the thrift executives requesting that First Palm's board retain an investment adviser to find ways to "maximize the near-term value of the common shares," the complaint said.
When he delivered the letter, Mr. Aldridge "demanded" that the directors sell the thrift to another financial institution, the complaint said.