A federal judge ruled Friday that an SEC filing by dissident shareholders of Mason-Dixon Bancshares included misleading information about the company's financial performance.
The shareholder group, Anthony Investments, has claimed that bank officials haven't considered merger opportunities, and is urging the bank to sell.
The statements concerned the bank's history of financial returns and its stock performance.
The U.S. District Court judge in Baltimore ruled that the shareholders group and the company must draft a corrective letter, to be issued by the court and distributed to all shareholders, "to repair any harm caused by the misleading statements."
The judge also ordered the shareholders group to rescind any proxies or power of attorney agreements it had previously obtained from other shareholders. The group wants shareholders to pass a resolution urging the banking company to form an independent committee to evaluate merger possibilities.
But the judge denied the bank's request to prohibit the shareholder group from soliciting future proxies or voting its shares at the company's annual meeting.
Both sides claimed to see a victory in the judge's actions.
"We consider the ruling to be very much in our favor," said Thomas K. Ferguson, president and chief executive of Westminster, Md.-based Mason- Dixon, which had sued the shareholders group.
"Anthony Investments feels vindicated," said Lawrence Dague, attorney for the shareholders group. "The court only granted one of the things the bank asked for."
In the November SEC filing, the group said it wanted Mason-Dixon to consider ways to maximize shareholder value, including a possible sale.
Barbara Floyd, president of the shareholders group, could not be reached for comment, but Mr. Dague said the group still wants the bank to consider a sale.
However, Mr. Ferguson said, the company plans to remain independent. "In the long run, our plan is going to best enhance shareholder value," he said.
The $836 million-asset company, parent of Bank of Maryland in Towson and Carroll County Bank and Trust Co. in Westminster, is one of a few independent bank holding companies in Maryland.
The shareholder group's 17 members include several former executives and directors of Mason-Dixon subsidiary banks. Ms. Floyd is a former chief financial officer of Carroll County Bank and Trust.
The shareholders had pooled their holdings in December and collectively own 5.1% of Mason-Dixon stock.
Mason-Dixon argued that the shareholders had violated a state law by not disclosing the group ownership to state regulators.
A separate ruling is expected from the judge on that issue, but meanwhile the corrective letter must tell all shareholders that the group may have broken state law.
"We feel strongly that the group did not violate Maryland state law," Mr. Dague said.
