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SALT LAKE CITY (AP) -- First Security Bank's former directors have reached a $29.9 million settlement in a class-action lawsuit brought by disgruntled shareholders.
The lawsuit, set to go to trial this week, was brought by former stockholders of First Security Bank. The stockholders claimed that First Security directors breached their duty to act in investors' interests when First Security merged with Wells Fargo in 2000.
The shareholders alleged the directors acted in their own interest and failed to provide adequate information about that deal, or the doomed merger attempt involving First Security and Zions Bank.
The settlement, agreed upon late last week, was conditionally approved by representatives from both sides.
The settlement will be submitted to the 3rd District Court for approval in the next few weeks. If approved, the court will send notice to the class members of a fairness hearing, where class members may formally object to the settlement.
Jon Harper, attorney for the class members, said he could not comment on the settlement except to say, "It's a good settlement, and we'll comment further as we prepare our documents in connection with the case."
James Jardine, attorney for First Security chief executive Spencer Eccles and other directors, also declined to comment.
In a prepared statement from both sides of the lawsuit, representatives of the directors and shareholders maintain their divergent positions, but concede the settlement is prudent.
"Plaintiffs' class representatives and their class counsel believe it is a good result and is in the best interest of members of the class," it said. "The defendant directors continue to deny liability and believe that the Wells Fargo merger was in the best interests of shareholders. However, the settlement was reached to avoid further costs and uncertainty."
The settlement money will come from the directors' and officers' insurance policies and will not affect Wells Fargo, which was not a party in the lawsuit.
The conflict dates back to the proposed merger between First Security and Zions Bank.
The two announced in 1999 they planned to wed, but the deal was hamstrung by tussles with federal regulators over asset divestitures and antitrust issues, a consumer lawsuit, earnings restatements from Zions and a lower-than-expected earnings announcement from First Security. Zions' shareholders voted it down in March 2000.
Wells bought First Security 10 days later in a $3 billion stock acquisition.
(Copyright 2003 by The Associated Press. All Rights Reserved.)