U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21334 / December 14, 2009
COURT ORDERS DISTRIBUTION IN NEWALLIANCE BANCSHARES IPO FRAUD
Securities and Exchange Commission v. Robert R. Ross, et al., Civil Action No. 3:05cv1036 (JBA) (D. Conn., filed June 28, 2005)
The Securities and Exchange Commission announced today that the United States District Court for the District of Connecticut has entered an order disbursing funds to victims of the alleged fraud relating to the NewAlliance Bancshares, Inc. initial public offering ("IPO"). The Eligible Claimants, as set forth in the Distribution Plan attached to the Court's order, are those depositors of the bank who (1) did not receive all the shares they requested in the IPO and (2) submitted a claim form to the SEC. These victims will receive a total of approximately $3.3 million collected as a result of the SEC's enforcement actions in this matter.
In three separate enforcement actions, the SEC charged various defendants with engaging in fraudulent schemes in connection with the NewAlliance IPO. The Commission's complaints alleged that (1) first priority for receipt of stock in the IPO was given to depositors of New Haven Savings Bank (the predecessor to NewAlliance) as of June 30, 2002, (2) the IPO offering was oversubscribed, and (3) as a result of the alleged fraud, certain eligible depositors did not receive all the shares they requested. Eligible depositors were thus deprived of the opportunity to purchase a total of 790,000 shares of NewAlliance stock.
Pursuant to the Distribution Plan, each Eligible Claimant will receive $4.19 per share for the number of shares of NewAlliance stock they would have received but for the fraud. In calculating the number of shares each Eligible Claimant would have received but for the fraud, the Commission utilized the services of Crowe Horwath (the successor to Crowe Chizek, an accounting and consulting firm retained by NewAlliance at the time of the IPO). Using the allocation formula set forth in the NewAlliance IPO prospectus, Crowe Horwath determined exactly how many of the 790,000 shares at issue would have been received by each of the Eligible Claimants if not for the alleged fraud. Each Eligible Claimant will receive a check for $4.19 multiplied by the number of shares he or she would have received.
A fourth SEC enforcement action remains pending in U.S. District Court in Connecticut, SEC v. Gary Richetelli.
The Commission acknowledges the assistance and cooperation of the U.S. Attorney for the District of Connecticut, the New Haven Division of the Federal Bureau of Investigation, and the Connecticut Department of Banking, Securities and Business Investment Division. The Commission's investigation is continuing.
[For further information, please see the Court's order attached hereto; Litigation Release No. 19288 (June 28, 2005); Litigation Release No. 19444 (October 25, 2005); Litigation Release No. 19714 (June 1, 2006); Litigation Release No. 19797 (August 9, 2006); Litigation Release No. 20934 (March 6, 2009); and the Investor Alert the Commission issued on June 28, 2005. The Investor Alert is available at: www.sec.gov/investor/
pubs/mutualconversion.htm.]
