St. Paul, Minn.-based Bremer Bank’s 16 employee-shareholders filed a complaint against the three trustees of the Otto Bremer Trust, who, as majority shareholders of Bremer Financial Corp., the bank’s holding company, have proposed to sell the bank, and were met with stark opposition in late October.
The shareholders filed the class-action complaint for breach of fiduciary duty and shareholder oppression. When the Bremer Financial board members opposed the decision to sell the bank, the trust called for the removal of non-OBT board members in an effort to expedite the bank’s merger or sale.
“Today’s action seeks to stop the trustees’ attempted seizure of the employee-shareholders’ voting rights,” said Richard Allyn, partner at Robins Kaplan, the law firm representing the shareholders on Jan. 8.
The 16 employee shareholders allege that the trustees’ efforts to seize voting control of the bank away from its employees and force a sale is unlawful and contrary to Otto Bremer’s vision for the bank to serve and give back to its local communities.
“For the past 30 years, the employees of Bremer Bank have controlled its destiny as majority voting shareholders, and they have nurtured and grown the bank into a landmark financial institution that serves local communities throughout Minnesota, North Dakota and Wisconsin,” Allyn said.
The 32-page complaint alleged that the Trustees revoked the shareholders’ voting rights when they sold shares, called “manipulative transfers,” to 19 out-of-state hedge funds.
In response, the Trust said in an emailed statement: “We believe very strongly that the bank’s employees are the integral component of Bremer’s culture, its successes to date, and its future.”
“While we disagree with the substance of today’s legal filing, we share the plaintiff’s obvious concern for what comes next for the bank and its people,” the Jan. 8 statement said. “For that reason, we strongly believe that looking at strategic options for the bank is good for the institution, good for its employees, good for the people and communities who benefit from the philanthropy Otto Bremer made possible and good for everyone who—like the trust—is a shareholder in the enterprise.”
On Jan. 13, Minnesota Attorney General Keith Ellison said he is investigating the circumstances of OBT’s proposed sale of the $12 billion bank, and whether the trustees’ motivations are self-interested and whether the sale is consistent with Otto Bremer’s intent that the trust’s bank shares would only be sold due to “unforeseen circumstances,” as they claim in their response to Bremer’s initial lawsuit against them.
“My job is to protect Minnesotans. Charitable assets are public assets that charitable trusts hold on behalf of the people of Minnesota,” Ellison said in a statement.
“My office is using the broad authority we have under the law to make sure that charitable trust assets are used for the public good,” Ellison said. “This includes by representing the public in making sure that trustees fulfill their fiduciary duties and remain faithful to the charitable purpose of the trust.”