`Lawyer: Subpoenas mean SEC taking hard look`

By Michael Roknick
Herald Business Editor

When the Securities and Exchange Commission doles out subpoenas, it is taking more than a casual glance at a company, said an attorney familiar with investigations by the federal agency.

On Tuesday, Sky Financial Group acknowledged that certain officers of the company, along with past executives and shareholders of First Western Bancorp have been recently subpoenaed as part of an SEC probe into Sky’s purchase of First Western.

The investigation appears to center on First Western’s stock before it was publicly announced last December that the New Castle holding company would be bought by Sky Financial of Selineville, Ohio.

Tom O’Shane, senior executive vice president of Sky Financial, said he considered the investigation a “normal course of action’’ by the SEC after a purchase. O’Shane is the former chairman and chief executive officer of First Western.

However, Mark Shepard of the Pittsburgh law firm of Babst, Calland, Clements & Zomnirmnir, said getting an SEC subpoena means the agency is taking more than just a cursory look at the deal. Shepard has represented people who have been the subject of SEC investigations.

“It’s pretty significant,’’ the lawyer said of the subpoenas. “Typically they won’t issue subpoenas unless they found some cause for belief that insider trading has occurred.’’ Among the first people the SEC will seek in such a case are company insiders — those who have close ties with a company, such as board members or major shareholders.

But getting a subpoena doesn’t mean there’s a smoking gun lurking somewhere, Shepard said. “There are situations that are really innocent; banking is a good example,’’ he said. “The fact of the matter is that with the rash of banking consolidations there were clearly a lot of people taking stock positions in banks not because they had insider information, but because the banking industry was going through consolidations and it (the buying of stock) was an educated bet.’’

“I feel fairly confident it was probably the latter,’’ O’Shane said.

On Dec. 14, 1998, First Western and Sky Financial jointly said Sky Financial was buying First Western in an all-stock deal that at the time was valued at $434 million.

O’Shane said Tuesday Sky Financial executives, former First Western executives and shareholders had been subpoenaed. O’Shane said that while he had not received a subpoena as of Tuesday he believed he would get one.

A message left this morning for Marty Adams, CEO and president of Sky Financial, was not returned.

The SEC said it will not comment on whether it is conducting an investigation into a company or individual.

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