Movement in Smithtown Bancorp shareholder suit
The Bank of Smithtown, owned by Smithtown Bancorp, is being converted to a People's United Financial bank after the parent corporation was taken over by the Connecticut-based company in July. Credit: Newsday, 2010 / Audrey C. Tiernan
One of the last loose ends related to the former Smithtown Bancorp got closer to being tied up Friday in a Riverhead courtroom.
Several shareholders of the company, which owned the now-defunct Bank of Smithtown, had sued the company and its board of directors after Connecticut-based People's United Financial agreed in July to take it over in a $60-million deal. The suits, which were consolidated into a class action, claimed the company didn't do enough to seek a better deal.
Attorneys in the suit got preliminary approval for a settlement from state Supreme Court Justice Emily Pines. They said as a result of negotiations Smithtown issued a detailed explanation in October of its financial problems and the steps it took to seek buyers when it became apparent the bank was on the brink of failure because of a mountain of bad commercial real estate loans.
That explanation made it clear that this was the best deal possible, said plaintiffs' attorney Seth Rigrodsky of Delaware.
Shareholders approved the deal in November, and it closed later that month. Bank of Smithtown branches are now being converted to People's United branches.
The settlement would award no damages to shareholders, who will have the opportunity to object to it at a hearing in May before Pines.
