Orrstown Financial Services (NASDAQ:ORRF) Investor Files Class Action Lawsuit Over Alleged Securities Laws Violations
May 29, 2012 (Shareholders Foundation) -- An investor in NASDAQ:ORRF shares filed a lawsuit in the U.S. District Court for the Middle District of Pennsylvania against Orrstown Financial Services over alleged Violations of Federal Securities Laws in connection with certain financial statements.
According to the complaint the plaintiff alleges that defendants violated the Securities Exchange Act of 1934 and the Securities Act of 1933. Specifically the plaintiff alleges that the Company's Registration Statement and Prospectus issued in connection with its offering of common stock on March 24, 2010 for the March 2010 Offering were allegedly negligently prepared and allegedly failed to disclose material information about Orrstown Financial Services’ loan portfolio, underwriting practices, and internal controls.
In October 2011, Orrstown Financial Services reported its financial results for the third quarter of 2011. Among other things, Orrstown Financial Services, also saidthat the Federal Reserve Bank of Philadelphia, one of the Bank's primary regulators, refused to authorize Orrstown's requested declaration of quarterly dividends.
According to the complaint, The Federal Reserve took this step to prevent the Company from engaging in an unsafe and unsound banking practice which would further deplete the Company's capital base. Furthermore, Orrstown Financial Services disclosed that it had $9.4 million in charge-offs for the third quarter of 2011, and that the Company faced "decreases in asset quality ratios, including elevated levels of nonaccrual loans, restructured loans and delinquencies."
Orrstown Financial Services’ Net Income of $16.58million for 2010 turned into a Net Loss of $31.96million in 2011.
Shares of Orrstown Financial Services (NASDAQ:ORRF) fell from over $28 in April 2011 to as low as almost $8 in November 2011 and closed on June 12, 2012, NASDAQ:ORRF closed at $7.75 per share.