PNC Bank 2009 Annual Report Download - page 164

approval. In August 2008, the district court entered an order
giving final approval to the settlement agreement. Some
objecting class members have appealed that order to the
United States Court of Appeals for the Third Circuit.
Separately, other individuals, whose loans were not acquired
by RFC, have actions pending on behalf of themselves or a
class alleging claims similar to those asserted in the settled
action with respect to the RFC loans. In one of these actions,
the alleged class overlaps the class in the settled action. These
actions remain pending in the district court.
In January 2008, the district court also issued an order sending
back to state court in North Carolina the claims of two class
members. These two plaintiffs then sought to represent a class
of North Carolina borrowers in state court, but the federal
district court in Pennsylvania enjoined class proceedings in
March 2008. In April 2008, the General Court of Justice,
Superior Court Division, for Wake County, North Carolina
granted these two plaintiffs’ motion for summary judgment on
their individual claims in this case. On appeal, the North
Carolina Court of Appeals ruled that it had no jurisdiction
over the appeal and remanded the case to the lower court.
Currently pending before the North Carolina Supreme Court
are appeals of both the jurisdictional decision of the Court of
Appeals and the merits of the original grant of summary
judgment.
The plaintiffs in all of these lawsuits seek unquantified
monetary damages, rescission of loans, interest, attorneys’
fees and other expenses.
BAE Derivative Litigation
In September 2007, a derivative lawsuit was filed on behalf of
BAE Systems plc by a holder of its American Depositary
Receipts against current and former directors and officers of
BAE, Prince Bandar bin Sultan, PNC (as successor to Riggs
National Corporation and Riggs Bank, N.A.), Joseph L.
Allbritton, Robert L. Allbritton, and Barbara Allbritton. The
complaint alleged that BAE directors and officers breached
their fiduciary duties by making or permitting to be made
improper or illegal bribes, kickbacks and other payments with
respect to a military contract obtained in the mid-1980s from
the Saudi Arabian Ministry of Defense, and that Prince Bandar
was the primary recipient or beneficiary of these payments.
The complaint also alleged that Riggs, together with the
Allbrittons (as former directors, officers and controlling
persons of Riggs), acted as the primary intermediaries through
which the payments were laundered and actively concealed,
and aided and abetted the BAE defendants’ breaches of
fiduciary duties, and sought unquantified monetary damages
(including punitive damages), an accounting, interest,
attorneys’ fees and other expenses. In September 2008, the
United States District Court for the District of Columbia
granted the motions of all defendants to dismiss the plaintiff’s
complaint. Plaintiff appealed to the United States Court of
Appeals for the District of Columbia Circuit, which, in
December 2009, affirmed the ruling of district court.
Regulatory and Governmental Inquiries
As a result of the regulated nature of our business and that of a
number of our subsidiaries, particularly in the banking and
securities areas, we and our subsidiaries are the subject of
investigations and other forms of regulatory inquiry, in some
cases as part of regulatory reviews of specified activities at
multiple industry participants. Among the areas in which there
is currently significant regulatory interest are practices in the
mutual fund and mortgage lending businesses. Several of our
subsidiaries have received requests for information and other
inquiries from governmental and regulatory authorities in
these and other areas.
The SEC is investigating activities at National City prior to its
acquisition by PNC. Enforcement staff in the SEC’s Chicago
Regional Office and Washington Office are conducting
investigations, in which PNC is cooperating. The SEC has
requested that National City provide the SEC with documents
concerning, among other things, National City’s capital-
raising activities, loan underwriting experience, allowance for
loan losses, marketing practices, dividends, bank regulatory
matters and the sale of First Franklin Financial Corporation.
The SEC is conducting a non-public investigation into events
at Equipment Finance LLC (EFI), a subsidiary of Sterling
Financial Corporation, which PNC acquired in April 2008.
The United States Attorney’s Office for the Eastern District of
Pennsylvania is also investigating the EFI situation.
Our practice is to cooperate fully with regulatory and
governmental investigations, audits and other inquiries,
including those described above. Such investigations, audits
and other inquiries may lead to remedies such as fines,
restitution or alterations in our business practices.
Other
In addition to the proceedings or other matters described
above, PNC and persons to whom we may have
indemnification obligations, in the normal course of business,
are subject to various other pending and threatened legal
proceedings in which claims for monetary damages and other
relief are asserted. We do not anticipate, at the present time,
that the ultimate aggregate liability, if any, arising out of such
other legal proceedings will have a material adverse effect on
our financial position. However, we cannot now determine
whether or not any claims asserted against us or others to
whom we may have indemnification obligations, whether in
the proceedings or other matters specifically described above
or otherwise, will have a material adverse effect on our results
of operations in any future reporting period.
See Note 25 Commitments and Guarantees for additional
information regarding the Visa indemnification and our
obligation to provide indemnification to current and former
officers, directors, employees and agents of PNC and
companies we have acquired, including National City.
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