Lutherville credit union probe nearing endThe federal...


November 11, 1993|By David Conn | David Conn,Staff Writer

Lutherville credit union probe nearing end

The federal investigation into securities trading by a Lutherville credit union is nearly finished, and it looks like the initial findings will clear the parties involved of any wrongdoing.

Readers may recall that the First Financial Federal Credit Union, whose 35,000 or so members include school employees and federal workers, had paid abnormally large fees to a broker at PaineWebber Inc. in Hunt Valley, according to brokerage documents The Sun obtained.

The documents showed the credit union paid commissions as high as 2 7/8 percent, while standard fees for such trades were between 1/32 percent to 1/8 percent. The commissions on five purchases and sales of government bonds amounted to almost $200,000, The Sun reported last year, and industry members said they shouldn't have cost more than $14,000.

And as it turns out, a top official at the credit union was married to the PaineWebber broker who officially had handled the account until 1991, an apparent violation of federal conflict-of-interest rules.

PaineWebber and First Financial denied any wrongdoing and said the broker, Robert W. Sitton Jr., had resolved any conflict by handing over the account to his office manager. But brokerage firm trading receipts and other memos showed Mr. Sitton still received most of the commissions from the credit union's business.

The National Credit Union Administration (NCUA), which regulates credit unions around the country, launched an investigation into First Financial's trading with PaineWebber.

After a year of looking into the case, the NCUA is close to concluding its investigation, deputy regional director Robert Schafer said this week.

"Despite what we may perceive as a high rate of commission on some of these investments, the fact of the matter is that the [securities] regulatory agencies and the investigative agencies" say that commissions are not considered "excessive" unless they exceed 5 percent, he said.

Still to be determined, Mr. Schafer said, is whether Mr. Sitton's role and that of his wife created a conflict of interest. The answer should come by the end of this year.

NationsBank touts its 'home team' efforts

Would-be fans of football in Baltimore couldn't have missed it:

"The Orioles Inc. has been acquired by The Home Team Limited Partnership . . . $60,000,000 Term Loan . . . $40,000,000 Revolving Credit Facility," the full-page newspaper ad said, with an orange and black Orioles logo near the top.

At the bottom, above a by now familiar red and blue logo, it read: "Financing provided by Baltimore Commercial Banking . . . NationsBank . . . October 1993."

Why should football fans give a hoot? Because NationsBank Corp. hasn't been able to erase the perception of some that Chairman Hugh L. McColl Jr. exerted his influence to help Charlotte, N.C., win a football franchise, but did little or nothing for Baltimore.

Despite the fact that NationsBank has offered financing to the ownership group headed by Leonard "Boogie" Weinglass, some local fans have questioned whether loyalty to the cause would permit doing business with NationsBank.

For the record, here's the explanation for the ad, from NationsBank spokesman Daniel Finney: "NationsBank automatically runs big ads, or 'tombstones,' in markets where they have done large, unique transactions, and had been talking about running this thing in connection with the Orioles transaction for several weeks prior to the closing of the transaction, and simply did it."

L As for a message the ad might send to Baltimore sports fans?

"We would have done it whether or not football was an issue in Baltimore," Mr. Finney assured, "and we would have done it the same size, and we would have done it on the same timetable."

Price stock up $1.75 after vote for 2-1 split

Investors reacted warmly to the news yesterday that xTC shareholders of T. Rowe Price Associates Inc. authorized a two-for-one stock split. The company's stock jumped $1.75 a share, to close at $61.75, on more than twice the normal volume.

Shareholders also endorsed an increase in outstanding shares to 48 million from 25 million to allow for the split, which takes effect Nov. 30.

Too late to get in on this deal, however. The record date was the close of business yesterday.

Carrollton Bancorp promotes Dallas Arthur

People in motion:

* At Carrollton Bancorp Dallas R. Arthur, the company's second-in-command, has been named president of the parent company and both president and chief operating officer of its subsidiary, Carrollton Bank.

* The Fidelity and Deposit Cos. elected Joseph C. Eanes Jr., now in his 35th year at F&D, as chairman of the board late last month; he'll remain chief executive officer. The company, owned by the Zurich Insurance Group, also named Richard F. Williams F&D's president and chief operating officer. He had been president and CEO of Empire Fire and Marine Insurance Co. in Omaha, Neb., another Zurich company.

* T. Rowe Price this month handed managing directorships to four executives: Stephen W. Boesel, manager of the Growth and Income Fund; Mary J. Miller, manager of several tax-free and municipal bond funds; Charles E. Vieth, head of defined-contribution retirement plans; and Mark E. Rayford, who manages recordkeeping services for those plans.

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