Sixteen employee-shareholders of St. Paul, Minn.-based Bremer Financial Corp. sued three trustees of The Otto Bremer Trust, which has held a majority of Bremer's shares since 1944.
The lawsuit contends that the defendants breached their fiduciary duties by attempting to strip shareholders of their voting control through a series of share transfers in pursuit of their own interests.
Bremer Financial sued the trustees in 2019, alleging that unbeknownst to its board, the trustees and their financial adviser held talks with potential acquirers, and during these discussions, they falsely represented that the company was available for sale and shared confidential information. After Bremer decided against the sale, the trustees allegedly sold a portion of the trust's nonvoting shares to 19 investment vehicles, which converted those shares into voting shares.
"The Trustees' ultimate goal of selling Bremer would put jobs at risk, harm the communities Bremer serves, and destroy shareholder value," according to the lawsuit.
The plaintiffs are seeking a declaration that the purported transfers of shares are unlawful and ineffective. They are also seeking a court order to prevent any further attempts to undermine their voting interests.
"While we disagree with the substance of today's legal filing, we share the plantiffs' obvious concern for what comes next for the bank and its people," a spokesperson for The Otto Bremer Trust said in an emailed statement. "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."