Clearly exasperated by the complex semantic arguments presented during a hearing today, U.S. District Court Judge J. Frederick Motz suggested the possibility of a rerun of the Baltimore Bancorp shareholder vote.
But Motz made no decision today. That is expected next week.
Baltimore Bancorp, the state's fifth largest banking operation, is the target of a takeover effort led by Edwin F. Hale Sr., owner of the Baltimore Blast soccer team and trucking and barging businesses.
At several points today, Motz suggested that a new vote would resolve legal issues raised in the takeover battle. "Why not put it back to a vote and re-run the election?" he asked.
The lawyer for the dissidents vehemently objected to the idea, while the lawyer for Baltimore Bancorp raised fewer objections.
A proxy fight involves soliciting votes from shareholders for a slate of candidates for a company's board of directors.
In shareholder voting in late May, Hale's slate of 16 candidates for the board won a majority.
But a key to Hale's strategy is to enlarge the board from 18 to 28 members. Without that, the Hale group can only take six of the 18 seats.
Today's hearing focused on whether 1 million votes, which were counted as abstaining, should be counted in favor of management. If those votes were cast in management's favor, the motion to enlarge the board would be defeated by a majority.
The contested 1 million votes were "beneficially" voted by companies on behalf of individual shareholders and companies. In this situation, proxies are sent to a central company, which sends summary forms stating how the proxies were voted. Baltimore Bancorp contends it should have the right to count these shares on its behalf. However, Corporation Trust Co., the firm that counted the proxies, decided to count the votes as abstentions.
Arguments for both sides turned on the wording of ballots and the information received by shareholders.
Motz found fault with both sides. He complained about the ambiguity of proxy material sent by the bank and the confusion caused by the Hale group mounting its challenge only a week before the company's annual meeting.