HopFed Bancorp in Hopkinsville, Ky., is forming a special committee to investigate claims of improper insider dealings by its CEO.
Stilwell Group, an activist investor that owns 9.5% of HopFed’s stock, has claimed that John Peck, who is also the company’s president, bought at least two properties in 2009 and 2010 from former director Gilbert Lee. Stilwell Group claims that those deals represent a conflict of interest for Peck.
The investor said Lee, who retired from the board last year and was once its chairman, chaired the board’s compensation committee when the transactions allegedly took place.
“We know that stockholders would want to know about this blatant conflict,” Megan Parisi, Stilwell Group’s director of communications, wrote in a May 1 letter addressed to shareholders.
Parisi also claimed in her letter that one of the lawyers who handled real estate closings for Peck is now an attorney for the $923 million-asset HopFed’s board.
HopFed’s board, which has backed Peck following prior accusations by Stilwell Group, is in the process of forming a committee to look into the allegations. Harry Dempsey, HopFed’s chairman, wrote in a May 1 letter to Parisi that the board would share the committee’s findings with the investor's legal counsel “when appropriate.”
Stilwell Group also filed a lawsuit against HopFed, Peck and past and present directors alleging that they added certain qualifications to the company’s bylaws in order to bar the investor from nominating a board candidate. The lawsuit was filed on May 4 in Delaware Chancery Court, according to filings by HopFed and Stilwell Group.
The investor did not nominate a director to stand for election at HopFed’s May 17 annual meeting.
HopFed, broadly addressing outstanding lawsuits in its quarterly filing, including litigation from Stilwell Group, said it “intends to vigorously defend itself in all such matters.”
A call to Peck was not immediately returned. A lawyer for Stilwell Group declined to provide additional comment.
Stilwell Group has locked horns with HopFed in the past while pressing the board to sell the company. In 2013 it sent a letter to HopFed’s shareholders complaining that Peck’s salary had more than doubled since 2001. The firm also objected to HopFed’s plan to buy Sumner Bank & Trust; the deal ultimately fell through.
Stilwell Group was able to get a representative, Robert Bolton, appointed to HopFed’s board in 2013. Bolton’s term expired in May 2016.