The Pennsylvania Department of Banking and Securities has levied a $190,000 fine against a group of investors trying to bring a bankrupt bank to Lancaster County and turn it around.
The department fined the group trying to buy West Chester-based Stonebridge Bank for selling securities for the reconstituted bank — subordinated debt and shares of stock — even though those securities weren’t registered with the state, according to a department consent order.
In its order, the department noted that during the investigation it had the “full cooperation” of the investment group. Also, by agreeing to pay the fine, the investment group does not intend to challenge the fine and does not admit or deny any of the allegations raised by the department.
Mark R. McCollom, senior managing director and co-head of financial institutions for Reading-based Griffin Financial Group, said he couldn’t comment on the issue. McCollom is working with the investment group to secure funding and set up the purchase of Stonebridge.
The plan is for the investment group, headed up by former state Rep. Gordon Denlinger, to buy Stonebridge, rename it Hamilton Bank and move it to Lancaster County.
But the plan recently hit some regulatory snags. The group had to return the capital it raised — more than $10.7 million, according to the consent order — to investors because it missed a May 31 deadline to finalize the purchase of Stonebridge.
As a result, the group also withdrew its state charter application, which it needs to finalize the sale. Denlinger said last week he expected to file the new application by today.