MNC shareholders' settlement OK'd

October 02, 1992|By David Conn | David Conn,Staff Writer

A federal judge has approved a previously announced $8.8 million settlement in a class action lawsuit brought by shareholders of MNC Financial Inc. who alleged that the banking company misrepresented its true condition before financial problems came to light in the fall of 1990.

U.S. District Judge J. Frederick Motz, at a hearing in federal court last Friday, approved the settlement agreement, which the parties had reached in April. The approval means the money will be put in an escrow account, and the plaintiffs' attorneys will distribute it to affected shareholders.

The members of the class are all 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 in January 1990.

The amount awarded to each shareholder who submits proof of purchase will be calculated by a formula that takes into account how much the shareholder originally paid minus the $2.625 per share that MNC's stock was worth on Feb. 1, 1991.

According to the agreement, the settlement administrator will mail a notice to all members of the class, and summary notices will be published in The Wall Street Journal, The Washington Post and The Sun.

The largest MNC common stockholder is Alfred Lerner, the current chairman, who acquired 8.9 percent of MNC when it bought Equitable Bancorporation. But, under the terms of the settlement, no MNC officers or directors, or their family members, are eligible to receive money.

Mr. Lerner had been the chairman and largest shareholder of Equitable. He took over the helm of MNC in September 1990 after the company's financial problems emerged. A large second-quarter loss and the subsequent sharp drop in the stock price led to then-chairman Alan P. Hoblitzell's resignation.

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