Jaroslawicz v. M&T Bank Corp.

Facts

Hudson City Bank, chartered in 1868, grew to become one of New Jersey’s largest savings banks but struggled following the 2008 recession. Hudson eventually partnered with M&T Bank Corporation to pursue a merger that would provide Hudson shareholders with a mixture of cash and M&T stock. The merger required approval from shareholders of both banks and from federal regulators, including the Federal Reserve Board. To obtain shareholder approval, the banks issued a Joint Proxy Statement filed on Form S-4 with the SEC, which became effective on February 22, 2013. The Joint Proxy included a section titled “Risks Related to M&T” discussing regulatory environment risks, noting that M&T faced increased regulation and scrutiny, and that regulatory reviews would assess effectiveness in combating money laundering. However, the Joint Proxy did not specifically disclose the condition of M&T’s BSA/AML compliance program or its practice of switching customers from free checking accounts to fee-based accounts without notice. Shareholders overwhelmingly approved the merger in April 2013, but just days before the vote, M&T announced that additional time would be required to obtain regulatory approval due to concerns about M&T’s BSA/AML compliance program. The merger ultimately took nearly two and a half more years to close. During this delay, the Consumer Financial Protection Bureau announced an enforcement action against M&T for its consumer checking practices, which had affected nearly 60,000 customers, and M&T agreed to pay $2.045 million to settle.