Golden State Bancorp, parent of Glendale Federal Bank, announced plans Tuesday to funnel to shareholders most of the winnings expected in its goodwill lawsuit against the government.
Golden State won a Supreme Court victory last year when the justices sent the matter back to a federal judge in Washington, D.C. The judge recently said it had an excellent case for compensation.
The company said that as soon as it board approves it would begin distributing securities representing the right to receive Golden State common stock equal in value to 85% of the net after-tax proceeds from the suit. The company seeks damages it claims were caused by accounting rule changes Congress enacted in 1989 after the thrift industry's crisis.
Golden State intends to apply for an exchange listing of the securities, and it is anticipated that they will be freely tradable after the distribution.
Stephen J. Trafton, chairman and chief executive officer of Golden State, said, the distribution of the securities "will provide a mechanism to allow the market to track the value of our pending goodwill lawsuit separately from the franchise value of the bank."