Romer v. Green Point Savings Bank

The board of trustees of Green Point Savings Bank (the bank) (defendant) adopted a restructuring plan that involved converting depositors’ funds to shares of common stock (the conversion plan). Eligible depositors would receive subscription rights to purchase shares of common stock. The bank mailed proxy materials to depositors in advance of a vote on the conversion plan. In November 1993, a class of depositors (the class) (plaintiffs) sued the bank alleging violations of securities laws by, for example, making inadequate disclosures. Under New York law, conversion plans had to be approved by the state superintendent. The superintendent ordered the bank to make supplemental disclosures and agreed to conduct an investigation into the fairness of the conversion plan and solicitation process. Subsequently, the bank’s conversion plan was approved by the depositors. By the end of the subscription period, depositors had subscribed to $835 million worth of stock. Under state law, the bank was required to complete the stock sales within 45 days, or by January 29, 1994. If the sales were not timely completed, subscribers would be released from their commitments and the bank would have to begin a new solicitation process. On January 23, the superintendent approved the bank’s conversion plan with modifications that cured the principal defects alleged by the class. On January 24, the class requested a temporary restraining order (TRO) in New York state court directed at the superintendent, which was denied. On January 26, the class sought a TRO in district court to bar the bank’s conversion activity, which the district court granted and made effective until February 3, 1994. On January 27, 1994, the bank filed an appeal. The Second Circuit decided to hear the appeal on an emergency basis and had to address the TRO’s appealability and propriety.