The opinion of the court was delivered by: GASCH
I. HISTORY OF LITIGATION.
Plaintiff began this action on February 17, 1978 with a complaint and a motion for a preliminary injunction. The complaint set forth six causes of action based on the Securities Exchange Act of 1934 (1934 Act) (Counts I, II, and III), the Virginia Take-over Bid Disclosure Act (Count VI), and common law (Counts IV and V). In addition to Metzger, the complaint named as defendants Bert Lance; the Bank of Credit and Commerce International (BCCI);
Agha Hasan Abedi (Abedi), the president of BCCI; and Stephens, Inc. and its president, Jackson Stephens (collectively, the Stephens defendants).
Five Middle Eastern investors alleged to be clients of BCCI were named as defendants by amended complaint filed March 21, 1978.
These are Sheikh Kamal Adham (Adham); Faisal Saud Al-Fulaij (Al-Fulaij); His Royal Highness Sheikh Sultan Bin Zaid Al-Nahyan (Sultan); Abdullah Darwaish (Darwaish), in his individual and representative capacities; and His Royal Highness Sheikh Mohammed Bin Zaid Al-Nahyan (Mohammed), a minor. Plaintiff charged, in essence, that defendants had formed a secret group in 1977 to acquire control of FG and by January of 1978 had purchased approximately twenty percent of FG's outstanding common shares, without filing the disclosure statements required by federal and state law.
On April 27, 1978, the Court granted plaintiff's motion for a preliminary injunction, finding that FG had shown a likelihood of prevailing on its claim that the defendants had violated section 13(d) of the 1934 Act, 15 U.S.C. § 78m(d) (Count I). The five Middle Eastern investors and Stephens, Lance, Metzger, Abedi, and BCCI were enjoined from acquiring any further interest in or proxies for FG common stock until they offered rescission to the shareholders from whom they had purchased FG stock on the open market during December of 1977 and January of 1978. The Court dismissed plaintiff's causes of action arising under sections 14(d) and (e) and 10(b) of the 1934 Act (Counts II and III) and the Virginia Take-Over-Bid Disclosure Act (Count VI). See Financial General Bankshares, Inc. v. Lance, (1978 Transfer Binder)Fed.Sec.L.Rep. (CCH) P 96,403 (D.D.C. Apr. 27, 1978).
Plaintiff filed a supplemental amended complaint on May 19, 1980, naming six additional defendants.
Two months later, all defendants remaining in the case, except Metzger, settled with FG and were dismissed by stipulation and order.
Thus, by the time of trial Metzger was the sole remaining defendant. At trial plaintiff sought to prove that from June of 1977 through January of 1978, while acting as counsel for FG, Metzger secretly (1) plotted to seize control of FG with other large shareholders; (2) attempted to generate interest in a plan to sell FG to a foreign bank at an enormous personal profit; (3) acted as agent for a group of Middle Eastern investors seeking to acquire a controlling share of FG stock; and (4) used a list of FG shareholders to identify and contact large shareholders potentially willing to sell to the Middle Eastern investors.
At the conclusion of trial the Court directed counsel for both parties to submit proposed findings of fact and conclusions of law. These have been received as directed.
The evidentiary record derives from four general sources: pretrial stipulations entered November 17, 1980 (Pretrial Stips. PP 1-71); testimony heard
and depositions read at trial;
and the parties' exhibits.
Based on this evidence and in accordance with rule 52(a) of the Federal Rules of Civil Procedure, the Court makes the following findings of fact and conclusions of law: