On July 29, 2004, U.S. District Judge James G. Carr issued an Order granting the Class counsel to distribute funds to those class members who submit valid claim forms. Class counsel shall distribute the remainder of the settlement fund proportionately to those class members who have the 200 largest claims. Further, Judge Carr ordered that $400.00 of the settlement fund shall be retained by class counsel for expenses. Earlier, on June 25, 2002, Judge Carr issued an Order and Judgment of Settlement Agreement/Dismissal of claims as to settling defendants. On March 31, 1999, plaintiff’s and certain individual defendants entered into an agreement and stipulation of dismissal. Those defendants were dismissed without prejudice.
According to the complaint, the class action arises out of the failure to and disregard for the applicable Federal and State laws and regulations controlling the sale of securities to the public in connection with an initial public offering (“IPO”) of Town Bancorp, Inc. common stock.
During the Class Period, the Towne Bancorp and individual Defendants failed to follow the applicable laws related to the sale of stock including proper disclosure as follows: (a) Subsequent to July of 1993, the financial statements of the Company were not timely amended and disclosed; (b) Throughout the Class Period, the registration statement including the prospectus was not timely amended and disclosed; (c) Throughout the Class Period, the Defendants ignored and thus breached the terms of the subscription agreement including but not limited to the time frames for the offering as defined in the Registration Statement; (d) Throughout the Class Period, the defendants continued to solicit, market and sell shares of the Company which were not properly authorized under the Company’s Articles of Incorporation; and, (e) Throughout the Class Period, the Defendants ignored and thus breached the terms, obligations and duties as prescribed by the Company’s Registration Statement, Prospectus and Subscription Agreements, including Amendments thereto.
In addition to the multiple and numerous violations of securities laws and regulations Defendants collectively and independently engaged in acts, practices and a course of business which operated as a fraud and deceit upon the shareholders. The acts and practices included the misstatements of fact designed to create a false impression as to the viability of the Company. The Complaint also alleges claims on behalf of the Company against the named Defendants as a shareholder derivative suit. The claims against these named individuals are based on their breach of fiduciary duty to the shareholders as members of the Board of Directors and as officers of the Company.