Wolf Popper Settles Lawsuit Against Certain Current and Former Officers and Directors of State Bancorp
On July 16, 2007, Wolf Popper filed a lawsuit in New York Supreme Court, Nassau County derivatively and for the benefit of State Bancorp, Inc. (State Bank) against certain current and former officers and directors of State Bank. The Complaint in the action alleges that the current and former officers and directors of State Bank knew of and caused State Bank to assist in a fraud perpetrated by Island Mortgage Network, Inc. As a result of those current and former officers’ and directors’ claimed breaches of fiduciary duty, State Bank allegedly lost significant sums of money in litigating and settling the lawsuits brought by those injured by the Island Mortgage fraud. The Complaint further alleges that the current Board of Directors has failed to discipline, fire, or demote any of the officers and directors directly responsible for the damages to State Bank. Instead, those officers and directors have been rewarded with bonuses, promotions, and/or generous retirement packages. By Order dated April 3, 2008, Hon. Ira B. Warshawsky denied defendants’ motions to dismiss. Soon thereafter the parties entered into an agreement to settle the case on behalf of State Bank.
The settlement provides for (i) significant corporate governance reforms at State Bank; (ii) substantial changes to the composition of the Company’s Board of Directors (the Board is being reduced from 15 to 10 members and 3 of the 10 will be “new” directors in that they came onto the Board after the commencement of the action); and (iii) the payment of $1.2 million in cash to State Bank from insurance. The settlement was approved by the Court on August 5, 2008.