Baltimore Bancorp suit becomes a class action

August 23, 1991

U.S. District Judge Marvin J. Garbis has ruled that a stockholder's suit against Baltimore Bancorp will be a class-action case. The decision could open the bank-holding company to larger damages if the shareholder is successful in the suit.

Baltimore Bancorp is the fifth-largest banking operation in the state and is the parent of the Bank of Baltimore.

The case was brought by Frank Tischler of Parkton, who bought 500 shares of Baltimore Bancorp at $9.50 a share on Aug. 31, 1990. The value of the stock subsequently declined to $5.125 a share on Nov. 1, 1990. The suit charges that Tischler and other shareholders paid an inflated price for the stock based on allegedly misleading statements by the bank.

The stock of Baltimore Bancorp had risen after First Maryland Bancorp made a tentative offer to pay $17 a share for the company on April 27, 1990. The bank rejected the offer on May 16 and First Maryland, the parent of First National Bank, formally dropped its proposal on Nov. 1, 1990.

Even though Tischler bought the stock after the bank rejected the First Maryland bid, the suit contends that, by saying the $17 offer was inadequate, the bank sent a misleading impression of financial strength to potential shareholders.

In his decision, Garbis rejected the bank's argument that Tischler was not typical of other stockholders.

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