BB&T Corp. said it was very disappointed and weighing its options after a Greenville County jury awarded $8.1 million to the former owner of a trust and asset management business who sold it to BB&T and then alleged that the company mismanaged his wealth.
BB&T spokesman Brian Davis didnt say Wednesday if the Winston-Salem, North Carolina, financial holding company would appeal. In court filings, the company denied the allegations.
The jury, according to its verdict, awarded Francis P. Maybank $3.1 million in actual damages and $5 million in punitive damages.
Maybank, now in his 80s, worked in the financial services industry in New York City for more than 20 years before moving to Greenville in 1980, according to court records.
Court records show he is a Charleston County resident. His attorney couldnt be reached for comment.
BB&T and two of its units were named defendants in Maybanks complaint, filed in Common Pleas Court. The jury verdict followed.
In 1988, Maybank formed Southeastern Trust Co., a Greenville-based company that provided trust services and asset management to individuals, businesses, charities and other organizations, according to court filings.
Over the next 12 years, Maybanks company grew to four offices one each in Greenville, Anderson, Columbia and Charleston with more than $700 million in client assets, according to the complaint.
In 2001, BB&T contacted Maybank about acquiring Southeastern, according to court filings.
BB&T didnt provide cash consideration for its acquisition of Southeastern. Instead, BB&T agreed to exchange its stock for shares of Southeastern, court records show.
For his Southeastern stock, Maybank received approximately 246,000 shares of BB&T common stock, according to court filings.
As a condition of the purchase, the bank required Maybank to stay on as a BB&T employee, but his role was limited to client relations, court records show.
As he moved into retirement, Maybank sought the advice and protection of BB&Ts wealth management and trust department, according to court filings. The bank was trustee under the Maybank Insurance Trust created by Maybank as grantor, according to the filings.
Under an agreement with Maybank, the bank promised to be his wealth manager and make suitable and appropriate recommendations for an investment program and investment guidelines for his assets, according to the filings.
However, rather than recommend that Maybank develop a diversified and prudent portfolio to generate income during his retirement, the defendants advised him to follow an investment strategy based on derivatives trading with BB&T stock, according to the complaint.
The strategy, according to the compliant, required execution of a highly complex derivative product known as a variable prepaid forward contract, or VPFC.
The scheme maximized the placement of Maybanks assets in fee-generating accounts at BB&T and was designed to benefit the defendants at his expense, he alleged in his complaint.
Maybank sustained losses in an unsuitably managed investment account, paid cash calls of approximately $1.7 million and incurred substantial tax liabilities, fees and costs associated with subsequent VPFC rollovers, according to his complaint.
He was placed in a financial death spiral, Maybank alleged in his complaint.
From the outset, the foundation of the defendants ill-conceived strategy was an ever-increasing dividend payment from BB&T stock, Maybank alleged. That foundation abruptly changed in mid-2009 when BB&T drastically cut its dividend, he alleged.