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Case ID: 5162 | Stocks | 08/22/2008
According to a law firm press release, a class action was filed in connection with Fifth Third's acquisition of First Charter on June 6, 2008, and on behalf of shareholders of First Charter as of November 26, 2007 and were solicited to vote on this acquisition.
On August 16, 2007, First Charter announced that it signed a definitive agreement to be acquired by Fifth Third for $31.00 per share, which would be paid in the form of 70% Fifth Third common stock and 30% cash. In connection with Fifth Third's acquisition of First Charter, Fifth Third filed with the Securities and Exchange Commission a Registration Statement and Prospectus on Form S-4 on November 7, 2007, amended on November 29, 2007 ("Registration/Proxy Statement"). The complaint alleges that Fifth Third and some of its senior officers and directors violated the federal securities laws by filing a Registration/Proxy Statement that was materially false and misleading. The complaint alleges, among other things, that the Registration/Proxy Statement failed to disclose: (a) the Company's increasing exposure to certain poorly performing real estate markets, including Florida, Ohio, and Michigan; (b) the Company's growing exposure to late payments and defaults on mortgages and other non-performing loans; (c) the extent of the decline in the quality of the Company's Tier 1 capital base; (d) the deteriorating credit trends and increasing expenses in the Company's consumer loan portfolio; (e) the negative trends in the Company's home equity and commercial construction loans; and (f) the deterioration in the credit quality of its loans. The truth began to emerge on June 18, 2008, when Fifth Third announced that it was in need of capital and was planning a $1 billion convertible preferred stock offering, a sale of "non-core businesses" to raise an additional $1 billion in capital, and a 66% reduction of its quarterly dividend, from $0.44 per share to $0.15 per share. On this news, the price of Fifth Third common stock declined 27% from its previous close of $12.73 per share, to close on June 18, 2008 at $9.26 per share on very heavy volume. The June 18, 2008 announcement of the previously concealed material facts revealed that the market price of Fifth Third stock on the five trading days prior to the June 6, 2008 closing of the merger, upon which the exchange ratio of First Charter shares was based, did not reflect the true value of Fifth Third shares. The true value of Fifth Third shares during the five day valuation period was materially less than the market value of Fifth Third shares because of the non-disclosure of these material facts. As a result, First Charter shareholders did not receive Fifth Third shares worth $31.00, but instead received Fifth Third shares worth substantially less and should have received additional Fifth Third shares in order to receive the $31 value merger consideration that they agreed to, pursuant to the Prospectus/Proxy statement. A similar class action was filed earlier in the year on behalf of purchasers of 7.25% Trust Preferred Securities. The two cases may become consolidated at a later time.
At Lawcash.com, it is our goal to keep you informed about important legal cases, class actions and settlements. Our lawyers offer free legal evaluations in tort cases, class actions, personal injury, and other lawsuits because we are dedicated to helping you resolve your legal complaints. Other Stocks Cases of Interest A class action has been filed against bank holding company North Country Financial Corporation (Nasdaq: NCFC) and certain of its former officers by stockholders who purchased the company's common stock between November 13, 2000, and April 15, 2003. Financing your retirement can be a very frightening, and dangerous, thing if you don't know what you are doing. A class action has been filed against Salomon Smith Barney, Inc. and certain of its agents on behalf of a group of North Carolina BellSouth retirees who allege that the company gave them faulty financial planning advice in violation of state consumer protection laws. The judge appointed lead plaintiff and approved her selection of Girard Gibbs LLP to serve as lead counsel on July 2, 2008.
On September 6, 2005, the Court dismissed several class actions that had been filed against electronic design automation software maker Synopsys, Inc. (Nasdaq:SNPS), and certain of its officers and directors by stockholders who purchased the company's common stock between December 3, 2003, and August 18, 2004. The actions claimed that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. This lawsuit, originally filed on May 15, 2008 in the New York Supreme was removed to the federal district court on June 2, 2008. A class action has been filed in the Southern District Court of New York against Royal Group Technologies, Ltd, (NYSE: RYG) a global manufacturer of polymer-based home improvement, consumer and construction products, and certain of its officers and directors by stockholders who purchased the company's common stock between February 11, 2004 and October 13, 2004. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock. |
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