A federal court in New Haven has ordered about $3.3 million returned to approximately 640 investors who were cheated out of their shares when NewAlliance Bank went public five years ago.
The Securities and Exchange Commission said today the settlement stems from its pursuit of criminal charges and ;civil damages against various defendants who were convicted in the 2004 scheme against depositors in NewAlliance’s predecessor, New Haven Savings Bank.
New Haven Savings had offered its depositors — who at the time owned the mutual savings bank — the first chance to sign up to buy stock in NewAlliance.
But according to securities regulators, a group who was not New Haven Savings depositors schemed to use straw buyers to collect shares for themselves, at the expense of legitimate depositors.
When the initial public offering of NewAlliance shares was oversubscribed due to heavy demand, many of the legitimate depositors did not receive all the shares they requested – roughly 2,100 depositors were shorted about 790,000 shares, the SEC said. NewAlliance was not a party to the scheme.
Under the settlement, about 640 of the shortchanged depositors who filed damage claims with the SEC will collect $4.19 for every share he or she would have owned, the agency said.
The SEC said it continues to pursue a civil claim against Milford developer Gary Richetelli, 61, who federal investigators claim masterminded the fraud to earn a $900,000 personal profit.
