MNC Financial Inc. and its former chairman have been slapped with another lawsuit alleging they misled investors by failing to accurately depict the company's mounting financial problems.
The suit was the third filed this year against MNC, the largest banking company in Maryland and the owner of Maryland National Bank and American Security Bank in Washington.
It was filed on behalf of shareholders who purchased stock from July 24 to Oct. 25, the day the company announced it had lost $173 million during the third quarter.
Over the three months covered by the lawsuit, MNC's stock fell from about $11.50 a share to as low as $3.625 a share. The company traded at a high of $29.25 a share slightly more than a year ago. MNC closed yesterday at $4 a share, down 25 cents for the day.
The lawsuit, brought Monday by two shareholders in Maryland, alleged that the company made various statements earlier this year "to lull the public into having a belief in the fiscal integrity and soundness of MNC and its loan portfolio, despite the fact that MNC was actually in far worse financial condition than defendants led the plaintiffs and the investing public to believe."
Two similar lawsuits in April and August were filed on behalf of MNC shareholders who purchased stock from the first of the year to July 24.
An MNC spokesman declined to comment on the lawsuits.
According to this week's suit, one of the plaintiffs, Robert B. Kelm of Towson, bought 300 shares of MNC stock Aug. 1 for $9.375 a share and 100 shares Aug. 31 for $9.875 a share. Christopher Trikeriotis of Baltimore, the second plaintiff, bought 100 shares at $7.50 a share and 100 shares for $7.375 a share Sept. 4. He purchased an additional 700 shares Oct. 16 for $5 a share, the suit said.
The suit alleges that Alan P. Hoblitzell Jr., who resigned as chairman of MNC Sept. 24 and remains an MNC director, had access to "adverse non-public information about the financial condition" and the quality of the company's loans but concealed its problems from investors.
Although no specific amount is being sought, the lawsuit asks for an award sufficient to compensate investors for their recent losses arising from the alleged misconduct.