Price sues Oppenheimer over failed bank's stock

March 25, 1995|By Bloomberg Business News

One of T. Rowe Price Associates' mutual funds has sued Oppenheimer & Co. for selling it stock in what became the first failed bank in the U.S. this year.

The T. Rowe Price Small-Cap Value Fund alleges that Oppenheimer, which underwrote Guardian Bancorp shares in late 1993 and early 1994, misled the fund about prospects for the bank's survival.

Oppenheimer officials were not immediately available to comment on the suit.

Guardian issued the stock after the Federal Reserve Board in 1993 censured it for inadequate capital and mismanagement. Oppenheimer told prospective investors that the bank was striving to decrease its nonperforming assets and hire new management, as part of a settlement Guardian reached with the Federal Reserve Bank.

But Baltimore-based T. Rowe Price says promises of a restructuring were false, and accuses Oppenheimer, a New York-based investment bank and securities company, of concealing the bank's troubles from investors. California banking regulators seized Guardian on Jan. 20.

The fund, which owns 450,000 shares of Guardian common stock and 450,000 warrants, wants Oppenheimer to rescind the securities sales and refund it $1.0 million. The suit, filed Tuesday in U.S. District Court in Manhattan, also seeks interest and unspecified damages.

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