Baltimore Bancorp will hold a special directors' meeting today regarding stock purchases by the company's chairman and chief executive.
The Securities and Exchange Commission staff has asked for records of stock trading by the company's top officials. Attorneys on both sides of an ongoing battle for control of the bank holding company said that they were contacted by SEC attorneys regarding eight separate purchases by CEO Robert F. Comstock, then an outside director, late last year and early this year.
The last purchase was made six days before a better-than-expected quarterly report led to a run-up in the price of Baltimore Bancorp stock from $4.125 to $6 within a week -- increasing the paper value of Mr. Comstock's newly purchased shares from $68,062.50 to $99,000.
Mr. Comstock has said that his purchases were legal. Records show that he reported his purchases as required by law and that he has not sold any of his shares.
The SEC does not confirm when it is conducting an inquiry, but a statement released yesterday by the Bank of Baltimore, the principal subsidiary of Baltimore Bancorp, confirmed that the commission's staff is conducting what the bank called an informal investigation.
Jerome P. Baroch, executive vice president of Baltimore Bancorp, said that Mr. Comstock was due back from Europe late last night and that one item on the agenda of today's meeting would be his account of his stock purchases.
In a statement issued by Baltimore Bancorp yesterday, Mr. Comstock welcomed the SEC's inquiry, saying that "there is no more authoritative way to show that this is just proxy contest mudslinging that's gone completely overboard."
The company's management is facing a proxy challenge from a group of dissident directors led by Edwin F. Hale Sr. Mr. Hale's faction is trying to push through a stockholder resolution that would expand the board by 10 seats, thereby allowing the dissidents to fill the seats and take control of the company.
Mr. Hale said he and his allies will "listen to any explanation" Mr. Comstock might have, but added that "what we've heard so far doesn't sound plausible."