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Release Date: 05/18/1999
Release Number:
99-97
Contact Name: Gloria Della
Phone Number:
202.219.8921 |
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The U.S. Department of Labor has obtained a
settlement agreement providing for Nationsbank of Georgia, N.A., a subsidiary
of Nationsbank of Charlotte, N.C., to distribute over $5 million in cash and
stock to the accounts of certain participants covered by the Polaroid Employee
Stock Ownership Plan. |
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Under the agreement, the bank will distribute the
cash and stock to participants covered by the plan as of April 1989. |
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The settlement resolves a lawsuit filed in June
1992 against the bank and its investment advisor, Sovran Capital Management
Corp. -- the successor to Citizens and Southern Investment Advisors, Inc.
(CSIA) in connection with Polaroid stock owned by the ESOP. |
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The ESOP was created in 1988 with $15 million in
cash and $285 million in loan proceeds to purchase stock of Polaroid. Shortly
after creation of the plan, Polaroid was the subject of an unsolicited takeover
offer. The company subsequently purchased up to 16 million shares of its own
stock at a premium price of $50 per share at a time when the stock was trading
at $40 per share. Nationsbank's predecessor, Citizens and Southern Trust
Company (Georgia) was trustee of the Polaroid plan. |
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In its lawsuit, the department alleged that
Nationsbank and its investment advisor violated the Employee Retirement Income
Security Act in connection with tendering the stock to Polaroid. The bank, the
lawsuit alleged, did not adequately investigate the merits of tendering the
stock owned by the ESOP to Polaroid and failed to monitor the performance of
investment advisor CSIA. The lawsuit also alleged that the bank imprudently
failed to tender certain stock to Polaroid. |
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CSIA allegedly failed to adequately analyze the
merits of the Polaroid offer to buy back plan shares in order to properly
advise the trustee on whether to tender the ESOP shares. |
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The settlement was entered on May 17 in federal
district court in Atlanta. |
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(Herman v. Nationsbank of Georgia, N.A.)
Civil
Action No. 1 92-CV-1474-HTW |
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U.S. Department of
Labor news releases are accessible on the Internet. The information in this
news release will be made available in alternate format upon request (large
print, Braille, audio tape or disc) from the Central Office for Assistive
Services and Technology. Please specify which news release when placing your
request. Call 202.693.7773 or TTY 202.693.7775. |
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