## Facts

- Carver Federal Savings Bank converted in 1994 from mutual to stock form and offered 2,314,375 shares at $10 per share.
- Plaintiffs purchased shares at the offering price; after trading began, the stock opened below $10 and declined further.
- The conversion plan and offering circular were approved in advance by the Office of Thrift Supervision (OTS) as required by federal thrift regulations.
- Offering materials described Capital Resources Group as an “independent” appraiser, though it was affiliated with Capital Resources, Inc., the selling agent/underwriter.
- An initial appraisal valued Carver at about $17.5 million; an updated appraisal valued it at about $23,143,750 (the top of the permitted range). The appraisals supported the offering price and were reviewed during the OTS approval process.
- Plaintiffs filed putative class actions alleging material misstatements and omissions in the offering circular regarding the appraiser’s independence and the basis and reliability of the valuations, asserting federal and state securities-law violations.
- The district court dismissed under Rule 12(b)(1) for lack of subject-matter jurisdiction, reasoning the suit was a forbidden collateral attack on the OTS conversion decision subject to exclusive court-of-appeals review under 12 U.S.C. § 1464(i)(2)(B).

## Issues

1. Whether 12 U.S.C. § 1464(i)(2)(B)’s exclusive-review provision for final OTS conversion decisions divests the district court of jurisdiction over private securities-fraud claims based on alleged misstatements or omissions in conversion offering materials.
2. How to distinguish a barred collateral attack on an agency conversion approval from an independent securities-disclosure claim seeking relief under the securities laws.

## Decision

- The Second Circuit reversed the jurisdictional dismissal.
- The court held the district court had subject-matter jurisdiction over plaintiffs’ securities-fraud claims predicated on alleged misstatements and omissions in the offering materials.
- The case was remanded for further proceedings on the merits.

## Legal Principles

- An exclusive-review statute channeling challenges to final agency action precludes district-court jurisdiction only for claims that, in substance, seek to invalidate, revise, or set aside the agency’s decision.
- Securities-fraud claims targeting the truthfulness and completeness of offering disclosures are not barred merely because a regulator approved the transaction and reviewed offering documents for regulatory compliance.
- Regulatory approval of a thrift conversion does not function as an approval of the accuracy or adequacy of offering disclosures; securities-law disclosure duties remain independently enforceable through private district-court actions.
- Courts assess whether adjudicating the plaintiff’s claim would necessarily disturb the agency’s regulatory determination; if not, the claim is not treated as a collateral attack.

## Conclusion

The Second Circuit held that the OTS direct-review scheme for conversion approvals does not strip district courts of jurisdiction over private securities-fraud actions alleging misleading conversion offering materials, and it remanded for adjudication of the disclosure-based claims.


Dougherty v. Carver Fed. Sav. Bank, 112 F.3d 613 (2d Cir. 1997)