(Against All Defendants for Violations of Section 14(a) of the Exchange Act and Rule 14a-9  and 17 C.F.R. § 244.100 Promulgated Thereunder)   (Against the Individual Defendants for Violations of Section 20(a) of the Exchange Act)   22.  Plaintiff brings this class action pursuant to Fed. R. Civ. P. 23 on behalf of  himself and the other public shareholders of Astoria (the “Class”).  Excluded from the Class are  Defendants herein and any person, firm, trust, corporation, or other entity related to or affiliated  with any Defendant.   23.  This action is properly maintainable as a class action because:  a.  The Class is so numerous that joinder of all members is impracticable.  As  of March 3, 2017, there were approximately 101.2 million shares of Astoria common  stock outstanding, held by hundreds to thousands of individuals and entities scattered  throughout the country.  The actual number of public shareholders of Astoria will be  ascertained through discovery;  b.  There are questions of law and fact that are common to the Class that  predominate over any questions affecting only individual members, including the  following:  i)  whether Defendants have misrepresented or omitted material  information concerning the Proposed Merger in the Proxy in  violation of Section 14(a) of the Exchange Act;  ii)  whether the Individual Defendants have violated Section 20(a) of  the Exchange Act; and  iii)  whether Plaintiff and other members of the Class will suffer  irreparable harm if compelled to vote their shares regarding the  Proposed Merger based on the materially incomplete and  misleading Proxy.   - 7 -  c.  Plaintiff is an adequate representative of the Class, has retained competent  counsel experienced in litigation of this nature, and will fairly and adequately protect the  interests of the Class;  d.  Plaintiff’s claims are typical of the claims of the other members of the  Class and Plaintiff does not have any interests adverse to the Class;    e.  The prosecution of separate actions by individual members of the Class  would create a risk of inconsistent or varying adjudications with respect to individual  members of the Class, which would establish incompatible standards of conduct for the  party opposing the Class;  f.  Defendants have acted on grounds generally applicable to the Class with  respect to the matters complained of herein, thereby making appropriate the relief sought  herein with respect to the Class as a whole; and  g.  A class action is superior to other available methods for fairly and  efficiently adjudicating the controversy.  24.  The Merger Consideration appears inadequate in light of the Company’s recent  financial performance and prospects for future growth.  Indeed, on April 26, 2017, the Company  reported first-quarter earnings of $14.4 million and profits of 12 cents per share.  The Company  also posted revenue of $121.6 million in the quarter, and its adjusted revenue was $92 million.   25.  Further, the Company’s shares have increased 11 percent since the beginning of  the year, and 34 percent in the last 12 months.   26.  Additionally, in its fourth quarter investor presentation, the Company noted that it  - 8 -  has “23 consecutive years of core profitability as a public company,” a “clean, well-capitalized  balance sheet,” and is “well positioned in its core Long Island market.”  The Company also  stated that its net interest margin increased every year between 2012 and 2016.1   27.  In sum, it appears that Astoria is well-positioned for financial growth, and that the  Merger Consideration fails to adequately compensate the Company’s shareholders.  It is  imperative that Defendants disclose the material information they have omitted from the Proxy,  discussed in detail below, so that the Company’s shareholders can properly assess the fairness of  the Merger Consideration for themselves and make an informed decision concerning whether or  not to vote in favor of the Proposed Merger.    II.  The Merger Agreement’s Deal Protection Provisions Deter Superior Offers   28.  The Individual Defendants have also agreed to certain deal protection provisions  in the Merger Agreement that operate conjunctively to deter other suitors from submitting a  superior offer for Astoria.   29.  First, the Merger Agreement contains a no solicitation provision that prohibits the  Company or the Individual Defendants from taking any affirmative action to obtain a better deal  for Astoria shareholders.  The Merger Agreement states that the Company and the Individual  Defendants shall not (i) initiate, solicit, knowingly encourage, or knowingly facilitate inquiries or  proposals with respect to any acquisition proposal, (ii) engage or participate in any negotiations  with any person concerning any acquisition proposal, or (iii) provide any confidential or  nonpublic information or data to, or have or participate in any discussions with, any person  relating to, any acquisition proposal except to notify a person that has made or, to the knowledge  1 Investor Presentation Fourth Quarter Ended December 31, 2016, Astoria Financial Corporation,  http://ir.astoriabank.com/phoenix.zhtml?c=94317&p=irol-presentations.   - 9 -  of Astoria, is making any inquiries with respect to, or is considering making, an acquisition  proposal, of the existence of Astoria’s obligations with respect to such acquisition proposals  under the merger agreement.    30.  Additionally, the Merger Agreement grants Sterling recurring and unlimited  matching rights, which provides it with: (i) unfettered access to confidential, non-public  information about competing proposals from third parties which it can use to prepare a matching  bid; and (ii) several days to negotiate with Astoria, amend the terms of the Merger Agreement  and make a counter-offer in the event a superior offer is received.   31.  The non-solicitation and matching rights provisions essentially ensure that a  superior bidder will not emerge, as any potential suitor will undoubtedly be deterred from  expending the time, cost, and effort of making a superior proposal while knowing that Sterling  can easily foreclose a competing bid.  As a result, these provisions unreasonably favor Sterling,  to the detriment of Astoria’s public shareholders.   32.  Lastly, the Merger Agreement provides that Astoria must pay Sterling a  termination fee of $75.7 million in the event the Company elects to terminate the Merger  Agreement to pursue a superior proposal.  The termination fee provision further ensures that no  competing offer will emerge, as any competing bidder would have to pay a naked premium for  the right to provide Astoria shareholders with a superior offer.   33.  Ultimately, these preclusive deal protection provisions restrain the Company’s  ability to solicit or engage in negotiations with any third party regarding a proposal to acquire all  or a significant interest in the Company.   34.  Given that the preclusive deal protection provisions in the Merger Agreement  impede a superior bidder from emerging, it is imperative that Astoria’s shareholders receive all  - 10 -  material information necessary for them to cast a fully informed vote at the shareholder meeting  concerning the Proposed Merger.   53.  Plaintiff incorporates each and every allegation set forth above as if fully set forth  herein.   54.  Section 14(a)(1) of the Exchange Act makes it “unlawful for any person, by the  use of the mails or by any means or instrumentality of interstate commerce or of any facility of a  national securities exchange or otherwise, in contravention of such rules and regulations as the  Commission may prescribe as necessary or appropriate in the public interest or for the protection  of investors, to solicit or to permit the use of his name to solicit any proxy or consent or  authorization in respect of any security (other than an exempted security) registered pursuant to  section 78l of this title.”  15 U.S.C. § 78n(a)(1).   55.  Rule 14a-9, promulgated by the SEC pursuant to Section 14(a) of the Exchange  Act, provides that Proxy communications with shareholders shall not contain “any statement  which, at the time and in the light of the circumstances under which it is made, is false or  misleading with respect to any material fact, or which omits to state any material fact necessary  in order to make the statements therein not false or misleading.”  17 C.F.R. § 240.14a-9.   56.  SEC Regulation G has two requirements: (1) a general disclosure requirement;  and (2) a reconciliation requirement.  The general disclosure requirement prohibits “mak[ing]  public a non-GAAP financial measure that, taken together with the information accompanying  that measure, contains an untrue statement of a material fact or omits to state a material fact  necessary in order to make the presentation of the non-GAAP financial measure…not  - 18 -  misleading.”  17 C.F.R. § 244.100(b).  The reconciliation requirement requires an issuer that  chooses to disclose a non-GAAP measure to provide a presentation of the “most directly  comparable” GAAP measure, and a reconciliation “by schedule or other clearly understandable  method” of the non-GAAP measure to the “most directly comparable” GAAP measure.  17  C.F.R. § 244.100(a).  As set forth above, the Proxy omits information required by SEC  Regulation G, 17 C.F.R. § 244.100.   57.  The omission of information from a proxy statement will violate Section 14(a)  and Rule 14a-9 if other SEC regulations specifically require disclosure of the omitted  information.     58.  Defendants have issued the Proxy with the intention of soliciting shareholder  support for the Proposed Merger.  Each of the Defendants reviewed and authorized the  dissemination of the Proxy, which fails to provide critical information regarding, amongst other  things: (i) financial projections for the Company and Sterling; (ii) the valuation analyses  performed by each company’s financial advisor; (iii) the fees Sandler O’Neill stands to receive in  connection with the Proposed Merger; and (iv) conflicts of interest faced by Astoria’s directors.   59.  In so doing, Defendants made untrue statements of fact and/or omitted material  facts necessary to make the statements made not misleading.  Each of the Individual Defendants,  by virtue of their roles as officers and/or directors, were aware of the omitted information but  failed to disclose such information, in violation of Section 14(a).  The Individual Defendants  were therefore negligent, as they had reasonable grounds to believe material facts existed that  were misstated or omitted from the Proxy, but nonetheless failed to obtain and disclose such  information to shareholders although they could have done so without extraordinary effort.    60.  The Individual Defendants knew or were negligent in not knowing that the Proxy  - 19 -  is materially misleading and omits material facts that are necessary to render it not misleading.   The Individual Defendants undoubtedly reviewed and relied upon the omitted information  identified above in connection with their decision to approve and recommend the Proposed  Merger; indeed, the Proxy states that Sandler O’Neill reviewed and discussed its financial  analyses with the Board, and further states that the Board considered both the financial analyses  provided by Sandler O’Neill as well as its fairness opinion and the assumptions made and  matters considered in connection therewith.  Further, the Individual Defendants were privy to  and had knowledge of the projections for the Company and Sterling and knew or should have  known of the conflicts faced by Sandler O’Neill each of the Company’s directors that have been  inadequately disclosed in the Proxy.     61.  The Individual Defendants knew or were negligent in not knowing that the  material information identified above has been omitted from the Proxy, rendering the sections of  the Proxy identified above to be materially incomplete and misleading.  Indeed, the Individual  Defendants were required to review Sandler O’Neill’s analyses in connection with their receipt  of the fairness opinion, question Sandler O’Neill as to its derivation of fairness, and be  particularly attentive to the procedures followed in preparing the Proxy and review it carefully  before it was disseminated, to corroborate that there are no material misstatements or omissions.   62.  The Individual Defendants were, at the very least, negligent in preparing and  reviewing the Proxy.  The preparation of a proxy statement by corporate insiders containing  materially false or misleading statements or omitting a material fact constitutes negligence.  The  Individual Defendants were negligent in choosing to omit material information from the Proxy or  failing to notice the material omissions in the Proxy upon reviewing it, which they were required  to do carefully as the Company’s directors.  Indeed, the Individual Defendants were intricately  - 20 -  involved in the process leading up to the signing of the Merger Agreement and the preparation of  the Company’s financial projections.     63.  Astoria is also deemed negligent as a result of the Individual Defendants’  negligence in preparing and reviewing the Proxy.   64.  Further, Sterling was directly responsible for the preparation of certain sections of  the Proxy, including the incomplete and misleading sections summarizing its projections and the  valuation analyses performed by its bankers, and was negligent in allowing the Proxy to be  disseminated to Astoria’s shareholders with incomplete and misleading information contained  therein.  Sterling permitted the use of its name in the Proxy to solicit Astoria’s shareholders to  vote in favor of the Proposed Merger.        65.  The misrepresentations and omissions in the Proxy are material to Plaintiff and  the Class, who will be deprived of their right to cast an informed vote if such misrepresentations  and omissions are not corrected prior to the vote on the Proposed Merger.     66.  Plaintiff and the Class have no adequate remedy at law.  Only through the  exercise of this Court’s equitable powers can Plaintiff and the Class be fully protected from the  immediate and irreparable injury that Defendants’ actions threaten to inflict.  67.  Plaintiff incorporates each and every allegation set forth above as if fully set forth  herein.   68.  The Individual Defendants acted as controlling persons of Astoria within the  meaning of Section 20(a) of the Exchange Act as alleged herein.  By virtue of their positions as  officers and/or directors of Astoria, and participation in and/or awareness of the Company’s  - 21 -  operations and/or intimate knowledge of the incomplete and misleading statements contained in  the Proxy filed with the SEC, they had the power to influence and control and did influence and  control, directly or indirectly, the decision making of the Company, including the content and  dissemination of the various statements that Plaintiff contends are materially incomplete and  misleading.   69.  Each of the Individual Defendants was provided with or had unlimited access to  copies of the Proxy and other statements alleged by Plaintiff to be misleading prior to and/or  shortly after these statements were issued and had the ability to prevent the issuance of the  statements or cause the statements to be corrected.   70.  In particular, each of the Individual Defendants had direct and supervisory  involvement in the day-to-day operations of the Company, and, therefore, is presumed to have  had the power to control or influence the particular transactions giving rise to the Exchange Act  violations alleged herein, and exercised the same.  The Proxy at issue contains the unanimous  recommendation of each of the Individual Defendants to approve the Proposed Merger.  They  were thus directly involved in preparing this document.   71.  In addition, as the Proxy sets forth at length, and as described herein, the  Individual Defendants were involved in negotiating, reviewing, and approving the Merger  Agreement.  The Proxy purports to describe the various issues and information that the  Individual Defendants reviewed and considered.  The Individual Defendants participated in  drafting and/or gave their input on the content of those descriptions.   72.  By virtue of the foregoing, the Individual Defendants have violated Section 20(a)  of the Exchange Act.   73.  As set forth above, the Individual Defendants had the ability to exercise control  - 22 -  over and did control a person or persons who have each violated Section 14(a) and Rule 14a-9 by  their acts and omissions as alleged herein.  By virtue of their positions as controlling persons,  these Defendants are liable pursuant to Section 20(a) of the Exchange Act.  As a direct and  proximate result of Individual Defendants’ conduct, Plaintiff and the Class will be irreparably  harmed.   74.  Plaintiff and the Class have no adequate remedy at law.  Only through the  exercise of this Court’s equitable powers can Plaintiff and the Class be fully protected from the  immediate and irreparable injury that Defendants’ actions threaten to inflict.  I.  The Merger Consideration Appears Inadequate in Light of Astoria’s Recent  Financial Performance and Growth Prospects  