| Wachovia settles SEC lawsuit by agreeing to pay fine
Virginia Business
December 2004
Wachovia
Corp, the nation’s fourth largest bank and one
of the largest private employers in Richmond, has agreed
to pay a $37 million civil fine to settle a lawsuit
by federal regulators over violations of disclosure
requirements during the bank’s 2001 merger with
First Union.
The U.S. Securities and Exchange Commission alleged
that Wachovia and First Union failed to disclose in
quarterly reports and in a joint proxy statement sent
to more than 200,000 shareholders that Wachovia intended
to buy, and later did purchase, about $500 million of
First Union stock at a time when First Union and Sun
Trust Banks Inc. had launched all-stock competing bids
for Wachovia, with SunTrust’s hostile bid initially
the highest.
As a result, the SEC said Wachovia shareholders were
unable to evaluate the effect of Wachovia’s purchases
on the First Union stock before voting on the competing
bids. “A company must provide full and accurate
disclosure with respect to its activities in the market
during a takeover battle,” Thomas C. Newkirk of
the SEC’s Division of Enforcement said in a statement.
In settling the complaint, Charlotte-based Wachovia
did not admit or deny the allegations. Company spokeswoman
Christy Phillips said the company is glad to have the
matter resolved. “The settlement will not have
a material adverse affect on Wachovia’s consolidated
financial position or results of operations,”
she said.
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