MNC Financial Inc., the parent company of Maryland National Bank and American Security Bank in Washington, has agreed to an $8.8 million settlement of shareholder lawsuits that charged the company with misrepresenting its financial and operating conditions.
The suits, filed in U.S. District Court in Baltimore, stemmed from the dramatic fall in the company's stock, from $29 a share in late 1989 to less than $3 a share in the fall of 1990. It closed yesterday at $7.375 a share, up 37.5 cents.
The suits charged that MNC provided false information about the health of its commercial real estate portfolio, which began collapsing in 1990. The company lost more than $500 million in the past two years.
The settlement, announced by MNC yesterday, is subject to the approval of U.S. District Judge Frederick N. Motz.
If approved, the money will be put into an escrow account, to be distributed under the supervision of the plaintiffs' attorneys, said MNC spokesman Daniel G. Finney. The distribution might include advertising to solicit claims, he said.
The settlement would benefit shareholders who bought MNC stock between Jan. 17, 1989, and Feb. 1, 1991, including former Equitable Bancorporation shareholders who received MNC stock when MNC bought Equitable at the end of 1989.
About $5.5 million of the settlement would be paid by MNC's liability insurance policy for directors and officers, Mr. Finney said.
He said the remaining $3.3 million would come from MNC funds.
Attorneys representing the plaintiffs, who filed their suits over the last two years, were not available for comment.