A Kentucky thrift has rid itself of four hostile investors whom federal regulators had ordered to sell their stock.

Pioneer Financial Corp., Winchester, repurchased about 28% of its stock from the investor group, whose members had been seeking control of the thrift for more than two years.

In a June settlement, the Office of Thrift Supervision ordered the four to sell their stock in 90 days and barred them from exercising any control over Pioneer in the meantime without prior approval.

The agency had accused them of violating banking law by exceeding stock ownership limits without first getting permission. Regulators charged that the investors also failed to disclose the size of their Pioneer stake. And the agency said the group didn't disclose regulatory action taken against two of its members in 1989.

Without admitting guilt, the group also consented in the settlement to a fine of almost $30,000.

Two of the investors were also ordered to pay almost $45,000 to the thrift, an amount equal to their profits from a 1989 sale of Pioneer shares plus interest.

The two, Fred M. Higgins and Catherine Higgins Howard, who are brother and sister, also were barred from buying any thrift stock for four years.

"If you have a situation with repeat offenders, what the OTS did is not unusual," said Richard Garabedian, a lawyer at Silver Freedman & Taff in Washington. "I can't understand why anybody in their right mind would do it again. The rules are tricky, but having been burned once, you would think that they would get the advice of competent counsel."

Pioneer paid almost $2.66 million, or about $41.50 per share, for the thinly traded stock in a purchase executed July 5, according to its quarterly report filed last month with the Securities and Exchange Commission.

Neither Pioneer officials nor the investors' attorneys would comment.

With shareholder activism on the rise nationally, the failure of the Kentucky group to achieve its goal highlights the importance for investors of complying with myriad banking rules.

The four - Phillip R. Perry, Charles Lester Key, Mr. Higgins, and Ms. Howard - acquired their initial individual stakes in Pioneer during its stock conversion in 1987. The OTS alleged that the investors were actually working together, though they did not form a limited partnership to seek control of the $82 million-asset thrift until 1994.

Mr. Higgins and Ms. Howard also have a history of disregarding securities law, according to the OTS. In 1984 and 1987, they and their father bought more stock than allowed in two other converting thrifts; they were the subject of a Federal Home Loan Bank Board enforcement action in January 1989. The board that year also ordered them to reduce their stake in Pioneer to less than 10%.

The OTS said the investors nevertheless began to increase their stake in Pioneer in 1994 without agency approval, after forming the limited partnership called East Kentucky Holdings or EKH Group.

Pioneer sued in July 1994, seeking an injunction blocking the group from making tender offers and restricting the group's activities involving Pioneer.

The investors countersued, demanding that the court order Pioneer to declare a dividend, seek competitive bids for legal services, evaluate and reveal merger offers, and disclose conflicts of interest involving the thrift's directors.

Both parties agreed to drop their suits last October after the OTS initiated proceedings against the investors.

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