Genesis Financial Partners blasted management of a Massachusetts cooperative bank this week, accusing the bank's president of suppressing the hedge fund's correspondence in an effort to protect his job.
In a sharply worded Jan. 9 letter to Central Co-Operative Bank chief executive John D. Doherty, Genesis president Stephen H. Gordon accused management of the Somerville thrift of breaching its fiduciary duty by not informing directors about concerns Genesis has expressed regarding the thrift's performance and management perks.
Mr. Gordon complained that Mr. Doherty did not forward copies of his Dec. 21 letter to directors. He said directors were not even aware of the correspondence until he spoke with them directly.
Mr. Doherty said in a Jan. 10 statement that Central officials will not respond to Mr. Gordon until the full board has been able to review his letters.
"Despite Mr. Gordon's denials, he has continued to personally harass our individual directors at their homes and offices," Mr. Doherty said in a statement. "Mr. Gordon's statements that information is being withheld from our directors and that management has sought to squelch any possible merger involving the bank is an 'outright lie.'"
In his earlier letter, Mr. Gordon, a former investment banker who started the Genesis hedge fund several months ago, had criticized Central's high expenses and poor earnings, and encouraged officials to restructure the balance sheet and implement other changes to boost income. He owns 6.4% of Central stock.
"The board of directors requires an open, unfiltered flow of information in order to perform its role as supervisor of management," Mr. Gordon wrote on Jan. 9. "Our efforts were intended to help the board to do its job more effectively; therefore, we deplore your attempt to thwart those efforts and, in fact, view your recent action as a bid to preserve your own entrenched position. We believe that it is your behavior which should 'not be tolerated.'"
Genesis has already contacted some shareholders and potential investors, as well as other financial institutions in the area, to express its concerns and evaluate the thrift, Mr. Gordon wrote. Based on those informal talks, he said, the thrift, whose stock is trading at about $14.50 per share, could be bought for about $21 per share.
But while several other Massachusetts banks are interested in buying Central, the letter said, local bankers have told Mr. Gordon that past efforts have failed because Mr. Doherty wants a job guarantee.
"We believe that your demand for job protection represents ... a profound conflict between your personal interests and those of all other shareholders," Mr. Gordon wrote.