Lawsuits can bring out some interesting information and the latest against Seattle Mortgage is a perfect example.
Bank of America acquired Seattle Mortgage’s reverse mortgage division in 2007 which included a portfolio of over $4 billion reverse mortgages, approximately 400 SMC employees as well as a retail sales force of more than 200 associates in 25 states. Terms of the deal were not disclosed until now…
The information comes after three former employees of Seattle Financial Group are suing to recover $5.5 million they lost in 2009 after their employment was terminated. The former employes are seeking up to $3.6 million apiece that they expected to receive from a company investment, called the Phantom Stock Plan.
According to the documents filed Friday, the issue relates to actions in 2006 involving the plan. The board voted to redeem the shares of two of its own members after Seattle Bank sold its reverse mortgage unit to Bank of America for $220 million, the Friday suit alleges. In addition to the companies, the suit names Benjamin Smith, his son-in-law and Seattle Financial CEO Robert Story Jr., David Smith and Robert Smith, Sr. Seattle Financial Group is a family-owned business owned by the Smith family.
Seattle Financial Group board members were compensated $74 million, using money from the BofA sale, for their 52 percent stake in the stock plan. Other board members, including Seattle Financial’s CEO, received $6 million in dividends from their shares. According to Friday’s complaint, the fine print in the plan said the entire investment plan should have been terminated at that time and all investors paid because such a large redemption had been made.