The Columbus Commercial Dispatch reports that the lawsuit was filed by RSD Capital in New York because Cadence’s stock is traded on the Nasdaq stock exchange. No trial date has been set.
The lawsuit, which gives only one side of the legal argument, names as defendants Cadence Chairman/CEO Lewis Mallory Jr., President/COO Mark Abernathy and others, including members of the board of directors.
The lawsuit alleges the defendants concealed details in a proxy statement to public shareholders in order to complete “a transaction which protects and advances the interests of Cadence’s management team who are using this opportunity to benefit themselves.”
Cadence spokeswoman Donna Rupp said the lawsuit was “without any merit” and shareholders will receive information regarding the suit in a forthcoming proxy.
The lawsuit was filed Oct. 28.
Cadence was sold to Houston, Texas-based Community Bancorp LLC in September, pending regulatory approval.
The deal pays shareholders $2.50 cash per share while an alternative deal with Trustmark Corp. would have provided shareholders with Trustmark stock valued at $2 per share.
The lawsuit alleges Cadence’s directors sold the company because it was unable to repay the government $44 million received through the Troubled Asset Relief Program.
The plaintiffs allege Mallory and Abernathy stand to receive three times their base salaries and one year’s worth of medical premiums after turning over control, but will remain employed if the previous payments violate regulations.
The lawsuit also alleges failed to disclose to shareholders the results of an in-house evaluation of whether or not to sell the company compiled with the assistance of a securities broker.
The plaintiffs also contend that the proxy statement omitted such information as the bank’s projected worth, how many potential buyers were contacted prior to the merger, how many expressed interest in acquiring Cadence and the criteria used to select those potential buyers.
The lawsuit seeks unspecified compensatory damages and attorney’s fees.