Mercantile and fired executive settle suits

Bank agrees to pay Pileggi $1.3 million, plus some benefits, legal fees

Parties exchanged bitter charges

April 01, 2005|By Bill Atkinson | Bill Atkinson,SUN STAFF

Mercantile Bankshares Corp. agreed to pay former executive John J. Pileggi $1.3 million to settle lawsuits over his firing for alleged fraud and breach of contract.

The Baltimore-based banking company, its chairman and chief executive, Edward J. Kelly III, and Pileggi agreed to dismiss all claims and provide full releases from any future claims, the bank disclosed yesterday in a filing with the Securities and Exchange Commission.

Mercantile agreed to pay Pileggi the money "in respect of" his employment contract as well as "certain related benefits" and a portion of his legal fees, subject to certain conditions, the document stated.

The two sides had been entangled in a bitter legal dispute that burst into public view with charges of adultery, disloyalty and double-dealing.

Neither Pileggi nor officials from Mercantile could be reached yesterday for comment.

Pileggi was chairman of Mercantile's wealth management division until he was fired a year ago.

The bank charged he had withheld from his superiors information that the mother of one of his employees stood to gain a nearly six-figure fee if the bank used a firm she recommended to oversee investments in a Mercantile hedge fund.

In July, Pileggi sued the banking company and Kelly for $240 million, alleging libel and contending that his firing deprived him of a large potential payout if Mercantile were sold. The bank has said it is not for sale.

Mercantile countersued Pileggi for more than $8 million and contended in its lawsuit filed last September that Pileggi had pressured a bank official to hire a woman with whom he was having an extramarital affair, was disloyal to his boss and superiors, and misled the company on a number of occasions, including in acquisition talks.

Pileggi alleged that the bank's inner circle "encouraged" a culture of profane and insensitive remarks. Mercantile, Pileggi said in a filing, has worked to "destroy his career in financial services" and to "smear" his reputation.

Kelly and other members of senior management "routinely engaged in harsh and derogatory critiques of other ... employees," Pileggi alleged. "Kelly and other senior staff used, tolerated and encouraged profanity and racially and gender-insensitive remarks."

Mercantile officials denied Pileggi's allegations.

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