CIB Marine Bancshares, Inc. ("CIB Marine" or the Company) is a holding company for CIBM Bank, an Illinois-chartered commercial bank.
According to CIB Marine's 2007 Annual Report:
On June 3, 2005, a first consolidated Complaint was filed by Dennis Lewis, a shareholder, and other alleged shareholders of CIB Marine in the United States District Court for the Central District of Illinois, Urbana Division, against CIB Marine, certain of its current and former officers and directors, and KPMG. The filing consolidated two actions that had been filed in January 2005: one filed by Lewis in the United States District Court for the Central District of Illinois, Urbana Division and another filed in the United States District Court for the Central District of Illinois, Peoria Division by Elaine Sollberger, a purported shareholder, whose claims were voluntarily dismissed in connection with the consolidation, and have not been reasserted in the consolidated Complaint. Plaintiffs sought to maintain the action as a class action on behalf of all persons who purchased common stock of CIB Marine between April 12, 1999, and April 12, 2004, claiming violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by CIB Marine and other Defendants and liability of certain Defendants other than CIB Marine and KPMG under Section 20(a) of the Exchange Act as controlling persons. The substance of the Complaint is that the financial condition of CIB Marine was overstated with the result that members of the purported class acquired their CIB Marine stock at inflated prices. Plaintiffs seek money damages, interest, attorneys’ fees and costs. The federal court in Urbana, Illinois granted the motion of CIB Marine and several other Defendants to transfer the action to the United States District Court for the Eastern District of Wisconsin, sitting in Milwaukee, Wisconsin, where the action was then pending.
All Defendants moved to dismiss the action on various grounds. On October 12, 2006 the court denied CIB Marine’s motion to dismiss, granted in part the motions to dismiss filed by the individual Defendants and granted the motion to dismiss filed by KPMG. CIB Marine and the individual Defendants have filed answers to the pending Complaint denying any liability. An additional person has moved to intervene as a Plaintiff in the action. In light of a recent decision of the Supreme Court of the United States that addressed the pleading standards that must be satisfied by the Plaintiff in a case such as this one, on July 16, 2007 CIB Marine and the individual Defendants filed a motion for judgment on the pleadings, or in the alternative, a motion for reconsideration of the ruling on the motion to dismiss, seeking dismissal of the action on the ground that the Plaintiffs have not satisfactorily pleaded one of the essential elements of their cause of action. That motion has been fully briefed and no date was set for a decision.
On November 10, 2006, Plaintiffs filed a further amended Complaint as to KPMG, which KPMG moved to dismiss. On August 13, 2007, the court granted KPMG’s motion and dismissed the action as to it.
As a result of the filing of the initial motions to dismiss, all discovery in this action was stayed automatically. Plaintiffs have moved to vacate that stay of discovery, which all Defendants opposed based on KPMG’s pending motion to dismiss the further amended Complaint filed by Plaintiffs against KPMG. In granting KPMG’s motion to dismiss, the court noted the pendency of the motion for judgment on the pleadings described above and ruled that the stay of discovery will remain in place. Plaintiffs have filed a separate motion for a limited lift of the stay of discovery, which CIB Marine and the individual Defendants opposed in their response filed on September 11, 2007. The court did not set a date to rule on the motions to vacate the stay of discovery.
The Company's Form 8-K filed with the SEC on August 20, 2008, announced preliminary terms of a settlement brokered on an August 14 settlement conference. The general terms of the settlement would involve the payment by the Company of approximately $3.4 million (against which the Company has previously reserved $3.0 million), together with an additional amount paid by the Company’s insurer, inclusive of costs and the Company’s agreement to certification of a Plaintiff class for purposes of participating in the settlement (all persons who purchased the Company’s stock between January 21, 2000 and April 12, 2004) and obtaining class approval, in exchange for which all claims against the Company, its insurer and the individual Defendants in both lawsuits would be dismissed.
The parties’ agreement to settle the cases on these terms is subject to a number of conditions, including (i) the negotiation of a definitive settlement agreement among the parties; (ii) approval by the Federal Reserve of the payment by the Company of the $3.4 million settlement amount into an escrow account pending final settlement; (iii) approval by the Federal Reserve of the terms of the settlement itself; (iv) having no more than a minimal number of class members opt out of the settlement class (which condition can be waived).
The parties entered into a Stipulation and Agreement of Settlement on September 23, 2008. On September 30, the Court granted preliminary approval of the Settlement. On November 25, the Court granted final approval of the Settlement, including an award of Attorneys’ Fees and Expenses, and entered Final Judgment.
