Suffolk Bancorp has canceled a shareholder meeting and filed a protest with regulators after shareholder North Fork Bancorp. publicly accused it of ignoring securities laws.
Suffolk took the unusual move after North Fork, a competitor on New York's Long Island, criticized it for not filing its proxy statement with the Securities and Exchange Commission before sending it to shareholders.
Suffolk, based in Riverhead, said it discovered that the electronic filing of its proxy statement with the SEC hadn't been completed because of miscommunication between the company's filing agent and its SEC counsel.
The discovery was pressed by North Fork president and chief executive John Adam Kanas, who fired off a letter to Suffolk officials last week accusing them of ignoring federal laws.
But while acknowledging their mistake with the proxy filing, Suffolk officials stressed that they were not responding to Mr. Kanas, and reacted angrily to the rest of his letter.
"The board of directors takes exception to the remainder of Mr. Kanas' letter, which it considers irresponsible, also reckless in its attacks on the character of Suffolk's directors," said a press release from Suffolk.
In the letter, Mr. Kanas charged that Suffolk officials violated other securities laws by failing to disclose enough relevant information in the proxy. He claimed that the company's directors are acting to protect "self- dealing transactions" worth "hundreds of thousands of dollars in fees" in 1994.
The purpose of the Sept. 28 meeting had been to seek shareholder approval for the company to double the number of authorized shares, to 15 million. The additional shares could be used as part of a shareholder rights plan, which Suffolk officials have said the company plans to adopt to deter takeover attempts.
Mr. Kanas questioned why Suffolk "should be fighting so vigorously" to prevent a takeover in the current consolidation environment. The strategy "flies so squarely in the face of reason as to give the appearance of recklessness on the part of your board," he wrote.
He also said officials had failed to explain why Suffolk was better off independent, and had failed to disclose any details of the shareholder rights plan they had mentioned or tell what antitakeover measures had already been taken.
And he threatened to "consider other appropriate alternatives" if Suffolk did not advise North Fork that it would revise its proxy statement.
Suffolk officials responded that the letter from Mr. Kanas violates an agreement North Fork made with the Federal Reserve Board in May, when regulators approved North Fork's application to buy up to 19.9% of Suffolk stock.
As part of the agreement, North Fork agreed not to interfere with the management of Suffolk.
"We consider that this letter goes over the line," said Suffolk corporate secretary Douglas Ian Shaw. Suffolk has filed a protest with the Federal Reserve, he said.