NEW YORK--(BUSINESS WIRE)--Driver Management Company LLC (together with its affiliates, “Driver” or “we”), the largest shareholder of First United Corporation (NASDAQ: FUNC) (“First United” or the “Company”), today disclosed that it has received a letter from the Maryland Commissioner of Financial Regulation (the “Maryland Commissioner”) questioning Driver’s ability to vote its shares at First United’s Annual Meeting of Shareholders (the “Annual Meeting”) on June 11, 2020. First United’s lobbying of the Maryland Commissioner puts any shareholder of a Maryland bank at risk of disenfranchisement if they express a view regarding that bank’s management, board of directors or strategic direction. This makes a mockery of the notion of shareholder rights, such as the right for shareholders to submit proposals pursuant to federal securities laws, nominate directors, call special meetings and generally communicate their views to management, boards of directors and fellow shareholders.
Driver has nominated a slate of three highly-qualified, independent nominees for election to First United’s eleven-member Board of Directors (the “Board”) at the Annual Meeting. We urge shareholders to vote to elect Driver’s entire slate on the WHITE Proxy Card.
To lend context, Driver has issued the below open letter to shareholders today:
It is truly mind-boggling that the Maryland Commissioner—the same regulator that was asleep at the switch in the years leading up to the 2007-2009 financial crisis, when the reckless actions of First United’s Board destroyed millions in shareholder value—is spending time and energy trying to tip the scales in this year’s election contest. It is equally appalling that taxpayer dollars are funding this patent use of public resources to further First United’s private aims. If anything, the Maryland Commissioner should be working to ensure that First United does not repeat history and again destroy millions in shareholder value in an economic downturn.
Based on the totality of the facts and circumstances, there is no conclusion to draw other than that the Maryland Commissioner’s action was initiated at the urging of First United. It should now be abundantly clear that First United and a state regulator with dwindling relevance have gamed the timing of the Maryland Commissioner’s letter in an attempt to disrupt shareholder democracy for their own mutual benefit less than 30 days before the Annual Meeting.
I hope that all First United shareholders and anyone interested in shareholders’ rights sees this for what it is: this is the desperate attempt of an entrenched Board (whose interests are being threatened) to impede the right of shareholders to elect directors of their choosing. The Board has obviously found a willing partner in a captive regulator more interested in protecting its turf than in ensuring the safety and soundness of Maryland chartered depository institutions. Shareholders need to send a strong signal to those who seek to trample their rights by voting to elect our entire slate on the WHITE Proxy Card.
It is clear to me that the Maryland Commissioner’s actions flout Due Process requirements and exceed any reasonable exercise of regulatory discretion. Driver intends to vigorously defend its rights in court and will, of course, take all necessary steps to prevent First United from trying to limit Driver’s ability to vote its shares at the Annual Meeting.
It is important to highlight that there has been no final determination with respect to the substance of the Maryland Commissioner’s letter—a letter that is clearly written in a way to avoid making any actual legal conclusion. The letter merely implies a violation that the Maryland Commissioner lacks the power to establish and punts responsibility for enforcing a prohibition on voting shares. It should be obvious that the Maryland Commissioner was working with First United to time its interference to limit the opportunity for a court of competent jurisdiction to intercede.
Finally, it is bizarre that the Maryland Commissioner should take this opportunity—in an environment when bank capital is under unprecedented stress and Maryland banks would clearly love to attract investors—to conclusively establish Maryland as the worst state in the country for investing in banks.
Driver Management Company LLC
About Driver Management
Driver employs a valued-oriented, event-driven investment strategy that focuses exclusively on equities in the U.S. banking sector. The firm’s leadership has decades of experience advising and engaging with bank management teams and boards of directors on strategies for enhancing shareholder value.