The battle for control of Bremer Financial has spawned another lawsuit, this one by 16 bank employees who oppose the Bremer foundation’s bid to force the sale of the $12 billion asset financial-services company.
The plaintiffs are asking a Ramsey County judge to certify the case as a class action on behalf of all employee-shareholders. They support the suit of the Bremer Financial board that has accused the three directors of Bremer Trust, the foundation, of manufacturing a crisis that founder Otto Bremer stipulated would be the only reason for Bremer to be sold; violating securities laws and engaging in a plot to unjustly enrich themselves.
“Today’s action seeks to stop the trustees’ attempted seizure of the employee-shareholders’ voting rights,” Richard Allyn, partner at Minneapolis law firm Robins Kaplan, said in a prepared statement. “Our clients allege the trustees’ efforts to seize voting control of the bank away from its employees and force a sale is unlawful and contrary to Otto Bremer’s  vision for the bank to serve [Upper Midwest] communities and return the bank’s profits to those communities through grants, gifts, and charitable work.”
The 30-page complaint alleges the defendant trustees breached their fiduciary duty by attempting to strip shareholders of their voting control through “manipulative transfers” of shares to East Coast hedge funds, violating Minnesota law.
Bremer Trust, in a prepared statement, said: “We believe very strongly that the bank’s employees are the integral component of Bremer’s culture, its successes to date and its future. And while we disagree with the substance of today’s legal filing, we share the plaintiffs’ obvious concern for what comes next for the bank and its people. 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.”
After Bremer Financial executives talked merger with another bank earlier this year, the three trustees and seven other directors of the bank began fighting over the shape and control of such a deal. The squabbling spilled into the open in October when the three trustees declared the bank was for sale and used a complicated, controversial maneuver to get control of 51% of the voting stock through hedge-fund sales.
The trustees said the potential interest by acquirers means Bremer Financial may be worth $2 billion, twice previous estimates. That means it would have to donate $100 million annually to comply with charitable-giving law.
Bremer Financial has challenged the accounting supposition. It has pointed out that it will provide about $80 million in dividends to Bremer Trust for 2019. The trust has been giving away about $50 million a year.
Further, Bremer Financial’s board has charged that the trustees, Brian Lipschultz, Daniel Reardon and Charlotte Johnson, who are paid $500,000-plus apiece to administer the foundation, want to increase the foundation’s assets so they can increase their compensation.
In addition to Bremer Financial’s suit against the trust, a Virginia investment firm has sued Bremer Financial after spending $9 million to buy company shares it hasn’t received.