Financial General Bankshares Inc. changed its name yesterday to First American Bankshares Inc. and took the final legal steps necessary to buy out its minority shareholders and become a private company.
The two actions, accomplished at a stockholders' meeting in Richmond, completed the takeover of the First American banks by a group of Middle Eastern investors who spent four years buying control of Washington's third largest banking company.
What would have been a routine end to the Financial General acquisition was disrupted by new accusations by a lawyer for disgruntled stockholders, who charged that the Middle Eastern group had violated Securities and Exchange Commission regulations during the final stages of the takeover.
Stockholders should have been told that investor Abdullah Darwaish is being investigated for allegedly helping defraud the royal family of Abu Dhabi, New York attorney Sam Sporn complained at the meeting.
Failure to disclose Darwaish's difficulties was "a material misrepresentation" that Sporn claimed "violates what I consider to be an SEC requirement."
Sporn's accusation was denied immediately by Robert Altman, attorney for the three Middle Eastern investors who bought the company. "There is no merit in that allegation whatsoever," Altman said.
The SEC has refused to say whether it is investigating possible violation of SEC regulations or securities laws by Darwaish.
On Tuesday The Washington Post disclosed that Darwaish had been placed under house arrest in Abu Dhabi and was being investigated for allegedly participating in a scheme to defraud that nation's ruler of $100 million.
Acting as financial adviser to the royal family of Abu Dhabi, Darwaish invested in the Washington banks in partnership with Sheik Kamal Adham, former head of the intelligence service of Saudi Arabia, and Faisal Saud al Fulaij, former head of Kuwait's national airline.
Darwaish bought into Financial General on behalf of a son of Sheik Zayed al Nayhan, ruler of Abu Dhabi and president of the United Arab Emirates, and now has been removed as their representative, Altman said.
At yesterday's meeting, shareholders voted to merge the old Financial General into a new company, FGB Holding Inc. Since the Middle Eastern investors own 96 percent of the common stock, the outcome of the vote was never in doubt.
The practical result of the merger is to force out legally the remaining 4 percent of the stockholders, making the bank holding company a privately owned firm that no longer is required to make public its financial data.
The remaining common-stock holders will be paid $33.80 a share for their stock, the same price given investors who voluntarily sold their shares. A parallel action ended public trading of the company's small number of Class A shares, by paying holders $28 a share for them. A handful of shares of preferred stock remain in public hands, and they, too, are expected to be called in by the company.