Regional Report Charlotte April 2010
With prominence comes privilege, often in the guise of access to powerful people. But as one branch of Charlotte’s prestigious Harris clan discovered, rubbing shoulders with fellow power players doesn’t get you the kind of counsel you think you deserve — sometimes only sensible-sounding bad advice that can send a portfolio plummeting.
That’s what Cameron Harris says happened to him. He, wife Dee-Dee and son Gary, longtime Wachovia Corp. shareholders, accuse former CEO Ken Thompson and several other executives of making misleading public — and private — statements about the bank’s health not long before it had to be rescued by regulators and sold on the cheap. Their lawsuit seeks unspecified damages that could reach into the millions.
Harris, grandson of a governor and part of the family that developed much of south Charlotte, says he confided to Thompson on a hunting trip in February 2008 that he was worried about the burgeoning housing crisis and Wachovia’s withering stock price — then about $12. Thompson talked him out of selling, the suit alleges, even though the CEO unloaded some shares that same month, reaping more than $500,000.
The bank’s board booted Thompson that June, but Wachovia continued to struggle until San Francisco-based Wells Fargo & Co. acquired it at the height of the banking crisis. Each Wachovia share fetched less than a fifth of a Wells Fargo share, which meant it was under $6 when the deal closed at year-end. The Harrises owned about 900,000 shares during the period covered by the suit. Many came from Wachovia’s purchase of Cameron M. Harris & Co., an insurance brokerage, in 2002. Harris launched a new brokerage last year.
The suit has some people scratching their heads: What else would Harris expect Thompson to do, give him inside information? For its part, Wachovia contends the family gave up its right to sue in return for the bank stopping collection proceedings in December 2008 after the Harrises fell behind on $12.9 million in debt — part of about $24 million borrowed over the years — and has asked the court to dismiss the case. One thing that had been propping up the loan was the poor-performing Wachovia stock.
The Harrises say the no-sue pact pertained only to the loan. Their attorney, C. Richard Rayburn, says he was assured they weren’t giving up their rights as shareholders. The suit quotes an e-mail from Wachovia lawyer Terri Gardner: “Honest Rick, the Bank would have a most difficult time with any Court in trying to enforce this release in any context other than this loan.”
Siemens generates energy jobs
Charlotte’s largest manufacturing expansion in more than 30 years will bring 825 jobs, a $135 million investment and a big building block for the city’s growing energy sector. Combined with a smaller expansion announced last year, Siemens Energy Inc., part of German industrial giant Siemens AG, will have 1,800 workers in the Queen City within five years, making it Mecklenburg County’s largest manufacturer. The new jobs at its gas-turbine factory will pay an average of $64,000 a year, compared with the county average of $48,776. Some will be taken by transfers from a Siemens plant in Hamilton, Ontario, which will close by the middle of next year. Since late 2007, companies have announced plans for more than 2,000 energy-related jobs in the county.