If an Illinois state bank hires a permanent lawyer, he then, by legal
votes, becomes a board member, the board then votes him in as
chairman, and he buys stock that comes on the market(the other 2700+
stockholders are not notified of available stock)would this be
conflict of interest in any way? He and his young son now hold the
largest block of voting stock. Only the board was aware of this. Also
one of the other board members now works for him in his law office. |
Request for Question Clarification by
ragingacademic-ga
on
22 Dec 2002 09:36 PST
333 -
There is obviously conflict of interest here, and possibly more...
What exactly would you be looking for in terms of a satisfactory answer?
thanks,
ragingacademic
|
Clarification of Question by
333-ga
on
22 Dec 2002 11:36 PST
I need support for my suspicion(other stockholders included also) that
our board chairman has been acting in a self-serving direction with
conflict of interest.
We already have an outside lawyer and have given him a copy of the
boards' plan to set up and transfer the bank into a holding company.
This would not necessarily be bad by itself if we weren't already
feeling betrayed by our chairman with the board's agreement as he has
continued his grab. We've just found out recently about his buying the
stock.
A group of us have decided, based on our lawyer's explanation, that
right now is not the time to be making big changes.
If you could point out the areas that create conflict of interest in
the scenario I described and some small explanation I think that would
be very helpful.
Thank you. 333 ga
|
Clarification of Question by
333-ga
on
26 Dec 2002 08:38 PST
I just found out that our director, the lawyer, was appointed director
by a block of stockholders with enough votes to do so legally. The
rest of the paragraph stands.
The board is asking for a vote at the annual meeting to merge the
bank into a financial entity in order to form into a holding company.
This will dilute our (now cumulative votes) to simple votes,and add
7000 more shares of stock. That will be almost twice as many votes as
the original 3000 shares now held by the old time families that
started the bank. We will no longer have peremptory rights on anything
any longer. The board will also create preferred stock that is so
called blank check stock. The board will decide everything concerning
it without input from current stockholders.
It feels as if the board is trying to grab complete control of the
bank away from the original stockholders. Is this what is happening?
Thanks, 333 ga
|
Request for Question Clarification by
ragingacademic-ga
on
27 Dec 2002 18:06 PST
333ga -
Thanks for your clarifications.
I could advise you on a theoretical basis, but have not been able to
find good examples that would lend support to my analysis. I fear
that you will not be satisfied with my reply without such support.
I think you should continue to work with legal counsel, and possibly
seek second and third opinions. It definitely does sound like
something fishy is going on - it may, however, all be perfectly
legal...
thanks,
ragingacademic
|
