Smithtown Bancorp, one of the largest independent banks in the New York
area with $2.7 billion in assets, is facing a class action suit by
shareholders for allegedly hiding information about risky construction
and real estate loans that eventually led to intervention by federal
and state bank regulators. The bank was forced at the end of January to sign agreements, called
consent orders, with the Federal Deposit Insurance Corp. and the New
York State Banking Department, to reduce the amount of commercial loans
and improve its loan underwriting policies or face further regulatory
action, including potential seizure of its assets. The complaint, filed in U.S. District Court for the Eastern District of
New York, alleges that the bank provided false and misleading
information about the performance of its lending business and real
estate assets, causing company stock to soar on the NASDAQ markets. The
complaint referenced press releases and other statements where the bank
claimed to be outperforming rival banks during the real estate boom and
even after the capital markets collapsed in September 2008. “Defendants’ false and misleading statements had the intended effect
and caused SBI common stock to trade at artificially high levels
throughout the class period, trading as high as $24.50 per share on
Sept. 29, 2008,” the plaintiffs alleged. By Feb. 2, 2010, the bank’s stock price fell as low as $4.16 a share. [more]

A BlackRock investment fund sold an 81-unit apartment building on the Upper West Side at 10 West 74th Street for $38 million, or $7 million below its purchase price in 2006. The buyer was identified as West 74 LLC — an entity affiliated with investor Elias Kalimian, principal with Midtown-based Elk Investors — and the sale went into contract in August before closing Oct. 29, city property records published today show. The fund of the powerhouse investment management company bought the property in September 2006 for $45 million, city records show, and in 2007 valued the property at $56 million, according to a federal Securities and Exchange Commission filing. The building was held by the BlackRock Diamond Property Fund, the SEC filing shows. The appropriate representative from BlackRock was not immediately available to comment, a spokesperson said. Recent apartment listings include a one-bedroom for $3,500 a month and a two-bedroom for $5,500, according to data from Streeteasy.com. Darcy Stacom, a vice chairman at CB Richard Ellis, was the sales broker. Elk Investors owns other properties in Manhattan including an office building at 489 Fifth Avenue at 42nd Street and an apartment building at 131 East 83rd Street at Lexington Avenue. The company did not immediately respond to a request for comment. [more]

A BlackRock investment fund sold an 81-unit apartment building on the Upper West Side at 10 West 74th Street for $38 million, or $7 million below its purchase price in 2006.

The buyer was identified as West 74 LLC — an entity affiliated with investor Elias Kalimian, principal with Midtown-based Elk Investors — and the sale went into contract in August before closing on October 29, city property records published today showed.

The fund of the powerhouse investment management company bought the property in September 2006 for $45 million, city records show, and in 2007 valued the property at $56 million, according to a federal Securities and Exchange Commission filing.

The building was held by the BlackRock Diamond Property Fund, the SEC filing showed. BlackRock declined to comment, a spokesperson said.

Recent apartment listings include a one-bedroom at $3,500 a month and a two-bedroom at $5,500, according to data from Streeteasy.com.

CB Richard Ellis vice chairman Darcy Stacom was the sales broker.

Elk Investors owns other properties in Manhattan including an office building 489 Fifth Avenue at 42nd Street and an apartment building at 131 East 83rd Street at Lexington Avenue. The company did not immediately respond to a request for comment. [more]

After an $18.9 billion loss in the third quarter, Fannie Mae plans to dip into an emergency Treasury Department fund for the fourth time this year, the Securities and Exchange Commission said yesterday. On top of the $44.9 billion the government-sponsored mortgage giant has already received in emergency financing, the company will ask for an additional $15 billion. The company says it does not foresee a quick end to its losses, and many believe this will not be the last time Fannie Mae will need to be bailed out. Ultimately, Fannie Mae will likely rack up $200 billion in emergency government funds, said Paul Miller, an analyst at Arlington, Va.-based FBR Capital Markets. Shares of Fannie Mae closed at $1.12 yesterday. They peaked at $87.81 in December 2000.

Buyers in condo-hotels across the country are turning to the courts to
get their money back, alleging that condo-hotel developers violated
securities laws in selling the units. The buyers argue that purchasing
a residential unit in a condo-hotel is akin to buying stock, and the
sales should therefore have been regulated by the Securities and
Exchange Commission. The SEC would require developers to use agents
licensed to sell both real estate and securities. But developers’ lawyers
say the legal argument doesn’t make sense. The decisions in these court
cases could determine whether the condo-hotel model survives. [more]