A former New Jersey banking mogul lost his legal battle to get nearly $ 20 million from the bank he founded, and was later fired.
A jury in a federal court ruled that Commerce Bancorp could not pay founder Vernon Hill any severance pay to which he was entitled under his employment contract. Hill, who founded Commerce in 1973 and built it into a regional empire spanning more than 425 branches, sued the bank holding company for several years of salary he said he owed him after being fired in 2007 “without reason “, plus interest, stock options and legal fees.
Commerce was acquired by TD Bank in an $ 8.5 billion deal shortly after Hill was fired. The two-week trial, which ended Tuesday, featured testimony from Hill and other bold names in finance, including George Norcross, South Jersey Democratic Party boss and former executive and board member of administration of Commerce.
The crux of the matter revolved around whether Commerce could legally pay Hill his severance pay. The bank’s board of directors sacked Hill shortly after settling a federal investigation into real estate transactions conducted by Commerce as part of its rapid expansion of its branch network that would also have benefited Hill’s family, including his wife.
Following the settlement, the bank was placed in a “troubled condition” which limited its ability to make “golden parachute” payments to departing executives.
To do this, the bank had to certify that it had no reason to believe that Hill had committed fraud, breached his fiduciary duty, or abused his insider privileges. It was impossible, lawyers for Commerce Bancorp argued, in part because of a 2008 settlement Hill reached with the Office of the Comptroller of the Currency, in which the regulator said Hill had, among other things, failed. to its fiduciary duty.
The jury in its verdict ruled that Commerce had proven its case, according to a court record. Lawyers for Hill and the bank did not respond to calls yesterday.
â¢ Commerce Bank and founder Vernon Hill face off in federal court in $ 20 million lawsuit