According to a federal document filing released this week, a superior court judge has granted preliminary approval of a settlement in a case involving the owner of Santa Barbara Bank & Trust that calls for paying $3.4 million to stockholders’ attorneys who sued over the company’s stock maneuvers last year.
Santa Barbara County Superior Court Judge Denise de Bellefeuille is scheduled to make a final ruling on the case at a January 19 hearing on the Pacific Capital Bancorp shareholders’ derivative suit, which is a type of litigation brought by one or more shareholders to correct or prevent what they see as something wrong with the corporation.
The proposed settlement also calls for Pacific Capital to replace its chief appraisal officer and undertake a three-year “corporate governance reform” program. While the plaintiffs’ attorneys could get $3.4 million in fees and expenses, the settlement does not call for the plaintiffs to get any cash.
The plaintiffs in the suit took issue with what Pacific Capital did with its stock last year when Texas billionaire banker Gerald Ford pumped $500 million into the sagging company while convincing the U.S. Treasury Department to allow it to pay back only 63 percent of the more than $181 million given to the embattled company through the Troubled Asset Relief Program.
The region’s largest bank holding company, Pacific Capital needed both the taxpayer and Ford’s bailout to boost its capital ratios, which were hurt by soured real estate loans at the start of the recession in 2007.
“The proposed settlement provides for a full and final dismissal with prejudice of all claims against Pacific Capital Bancorp and the individual defendants,” a November 30 Security and Exchange Commission filing says. “The proposed settlement does not involve any admission of wrong doing or liability, and there has been no adjudication of the merits of the underlying claims.”
Pacific Capital Bancorp officials did not respond to a request for comment, nor did the shareholders’ lead attorney, Frank Bottini.
Last month, Pacific Capital reported a net income of $20.5 million for the third quarter of this year. In 2008 when the company reported multimillion-dollar losses each quarter, Pacific Capital dropped more than 325 of its 1,664 full-time employees and slashed retiree benefits. The company has hired back about two-thirds of those workers.