October 24, 1995

Activist Sues To Overturn Merger Approval By First Union Shareholders

By PAUL NOWELL

Several community groups filed a lawsuit Tuesday seeking to overturn First Union Corp. shareholders' approval of a proposed $ 5.4 billion buyout of New Jersey's biggest bank.

Attorneys for the Boston-based community group Neighborhood Assistance Corporation of America and three other groups filed the suit in Mecklenburg County Superior Court.

NACA opposes the First Union-First Fidelity merger because it charges that First Union's lending policies discriminate against minorities.

The merger, which is expected to close by the end of the year, is one of the largest bank deals in history. It will create a banking company with $ 128 billion in assets and 1,200 offices from Connecticut to Florida.

The combination must still be approved by bank regulators.

The plaintiffs are seeking a preliminary injunction that would nullify the results of a special shareholders meeting on Oct. 3, when First Union shareholders overwhelmingly approved the merger with First Fidelity Bancorp.

The defendants in the suit are First Union and three of its top executives, including chairman and chief executive officer Ed Crutchfield.

The suit alleges that Crutchfield conspired with the other bank executives to exclude NACA members from attending the meeting.

"Not only do they discriminate against minority borrowers and communities, but locking the entrances to their headquarters during the stockholders meeting is indicative of their attitude toward the minority community - they will try to be the invisible bank at all costs," said NACA executive director Bruce Marks.

"The allegations are groundless," responded First Union spokesman Jeep Bryant.

Led by Marks, the demonstrators were rebuffed in their effort to disrupt the meeting in Charlotte.

Marks, who said he owns First Union stock, and the other protestors were kept outside because they were not on the list of shareholders for the record date of the meeting, which was Aug. 22, said Bryant.

"They had no materials to indicate they were shareholders," Bryant said.

Members of at least one Charlotte community group did attend the shareholders meeting.

"This is a serious violation of stockholders' rights," Marks said in a telephone interview Tuesday from Boston. "It's a conspiracy to prevent the opposing point of view from being voiced."

The other plaintiffs are the Union Neighborhood Assistance Corp.; the Community Assistance Corporation of America; and the Neighborhood Stabilization Corporation. Like NACA, all three groups also are based in Boston.

At the special shareholders' meeting that lasted less than 15 minutes, about 90 percent of the shares voted in favor of the merger with First Fidelity, which is headquartered in Newark, N.J. and Philadelphia.

This article is reprinted here for non-commercial, educational, fair use purposes only.