Mason-Dixon Bancshares Inc. yesterday sued a group of shareholders that has been urging management to consider selling the company.
The bank is alleging that the group, known as the "Concerned Shareholder Group," has illegally acquired 5.1 percent of the company in violation of federal securities laws and Maryland bank acquisition laws, according to the suit filed in U.S. District Court in Baltimore.
Mason-Dixon is seeking an immediate injunction that would defuse the group by stopping it from soliciting additional shareholders and prohibiting it from exercising any voting rights.
The Concerned Shareholder Group and a "disgruntled" Mason-Dixon official are using a "campaign of misinformation and omission, to force a sale of Mason-Dixon, one of the few bank holding companies of any significant size remaining in Maryland," the suit states.
Barbara Floyd, the former Mason-Dixon executive who heads the shareholders' group and is named in the lawsuit, said she hadn't seen the suit.
"It wouldn't be appropriate for me to say anything," she said. "I just need to see what it is before I can comment."
Floyd's group of 17 investors filed documents with the Securities and Exchange Commission Nov. 22 stating that it held 268,671 shares, or 5.1 percent of the Westminster-based banking company.
The group said it wanted management to explore ways to "maximize shareholder values," including the sale of the company, parent of Carroll County Bank and Trust Co. and Towson-based Bank of Maryland.
Mason-Dixon's shares were unchanged yesterday at $22.25 a share, a 52-week high.
The shareholders' group claimed that one or more banks have approached Mason-Dixon, expressing an interest in acquiring or merging the $838 million-asset financial institution.
But the directors have failed to meet their obligation to shareholders by not engaging in discussions, it said.
"We just want them to be open-minded about all opportunities," said Floyd, who was assigned the right to vote its 5.1 percent block of shares. "We are not saying we want them to sell, we want them to listen and explore all of the opportunities."
The suit seeks an immediate injunction to block Floyd and her group from "unlawfully soliciting" other shareholders. It also wants proxies "illegally given" to Floyd to be invalidated; Floyd and the group to be prohibited from exercising any voting rights with respect to their stock; and that the group correct "misleading information" that has been disseminated.
The suit alleges that Floyd, who is president of Anthony Investments Inc. in Severna Park, and other defendants violated federal securities laws by soliciting more than 10 proxies before furnishing shareholders with a publicly filed written proxy statement.
It further alleges that Floyd and other defendants disseminated inaccurate and misleading information to other shareholders, and that they violated Maryland law by not receiving approval from the state's banking commissioner before acquiring the 5 percent stake in the company.
Thomas K. Ferguson, president and chief executive of Mason-Dixon, declined to comment on the suit, saying he had been advised by legal counsel to let the filing speak for itself.
The suit characterizes Floyd as a "disgruntled" former chief financial officer of Mason-Dixon who has "admitted the group's improper possession of confidential information and records and who stands to personally profit. "
The suit says Floyd left the bank in 1992 because she expected to be named president but was passed over in favor of Ferguson.
It also alleges that Floyd has been assisted by Alvie G. Spencer Jr., a former Mason-Dixon director who was named in the lawsuit.
Spencer was removed from the board of the holding company and not re-elected to its subsidiary bank, Carroll County Bank, because, the lawsuit alleges, he disclosed confidential information to an outside party about the company.
Pub Date: 12/10/96