Suit alleging securities fraud filed against Orrstown BankTim Stuhldreher
Orrstown made “false and misleading statements” in the registration statement and prospectus for its March 24, 2010, common stock offering, said the complaint filed by Haverford-based Chimicles & Tikellis. The firm describes itself on its website as a “leading national class action law firm” that has recovered billions of dollars for its clients.
The suit alleges that Orrstown continued to mislead investors about its loan portfolio and risk management until October 2011. That month, the bank announced $9.4 million in charge-offs and the Federal Reserve of Philadelphia, one of Orrstown’s regulators, refused to authorize a dividend payment.
Orrstown’s stock price swiftly dropped, “indicating that the defendants’ false assurances caused Orrstown to trade at artificially high prices” until then, Chimicles & Tikellis said in a statement.
The suit accuses Orrstown of violating the federal securities law and seeks compensation for anyone who bought Orrstown shares between March 24, 2010, and Oct. 27, 2011. It names the Southeastern Pennsylvania Transportation Authority, or SEPTA, the Philadelphia area’s public transportation authority, as lead plaintiff.
Calls to Orrstown seeking comment were not immediately returned.
Orrstown lost $32 million in 2011, according to company filings. In March it signed consent orders with the Philadelphia Fed and the state Department of Banking.
“We are not satisfied with our results and know you deserve better,” bank President Thomas Quinn wrote shareholders in the bank’s annual report.
The company’s shares trade on the Nasdaq under the ticker symbol ORRF.