Activist Investor Stilwell Ordered to Appear in Securities Case

Joseph Stilwell, an activist investor who has targeted community banks, has been ordered to appear in federal court in New York in connection to a subpoena request for an investigation into potential securities fraud.

The Securities and Exchange Commission on Wednesday asked the U.S. District Court for the Southern District of New York to order Stilwell to respond to its subpoena, after the investor said he wouldn't respond. The SEC said it's investigating possible fraud or securities law violations at funds managed by Stilwell.

U.S. District Court Judge Ronnie Abrams granted the SEC's application on Wednesday and ordered Stilwell to appear in federal court on Sept. 9.

The SEC said in a statement that its subpoena is investigating whether Stilwell's funds "accurately disclosed the existence and true terms of [and] potential conflicts of interest created by" inter-fund loans. About 20 inter-fund loans made by Stilwell's funds, dating back to 2003, are the subject of the probe.

The SEC's investigation was approved in November 2012, and a subpoena was issued to Stilwell earlier this year, according to a court filing. Stilwell's lawyer responded on Aug. 4 that Stilwell did not intend to provide testimony in response to the subpoena.

Stilwell on Monday referred questions to his lawyers, Steven Glaser at Skadden, Arps, Slate, Meagher & Flom, and Peter Hardy at Post & Schell.

"Joe Stilwell has acted at all times with the best interests of his investors in mind," Hardy said in an email. "The SEC's motion for an order to show cause is factually and legally erroneous, and we look forward to vindication."