DURHAM, N.C. -- Three former employees of NCM Capital Management Group Inc. have filed a lawsuit against the firm's owners, alleging the owners interfered when employees tried to buy part of the firm's holding company.
Former NCM marketing employees Brenda Walker and Stanley Laborde and portfolio manager Lawrence Verny said in the complaint they believed NCM was mismanaged and non-competitive, and in need of new direction.
Durham, N.C.-based NCM is a wholly owned subsidiary of Sloan Financial Group Inc., headed by Chairman Maceo Sloan. He denies the allegations. The case is pending in Wake County Superior Court in North Carolina.
Troubles within the firm began in early 1997. About eight employees banded together to find a buyer for the 40% of Sloan Financial that was held by American Express Financial Advisors Inc., Minneapolis.
The lawsuit alleges that Mr. Sloan interfered with employees' efforts, blocking them from a "prospective economic advantage."
The lawsuit also accuses Mr. Sloan and two American Express executives of fraud and misrepresentation, alleging they appeared to cooperate with the group's efforts.
Mr. Laborde also claims Sloan Financial breached a contract with him that promised a 1% interest in Sloan Financial. Mr. Laborde and Ms. Walker also are asking for unpaid salary, bonuses and commissions. They claim total damages of more than $10,000.
"This all happened nearly a year ago," Mr. Sloan said. "They want to create as much turmoil as possible to put pressure on me to settle."
NCM manages $4.2 billion in institutional assets. It is subadviser for the Dreyfus Third Century mutual fund, which posted a return of 29.37% for 1997. The benchmark for the socially responsible fund is the Standard & Poor's 500 stock index, which returned 33.36% for the year.
Since the fall-out last April, the firm has reorganized a little, Mr. Sloan said. "I de-emphasized the marketing side and increased the investment side," Mr. Sloan said. Marketing staff were heavily involved in the employee alliance.
"In the last two years, I've spent millions upgrading our systems. The reorganization was for the good of our clients. This lawsuit is a business disaster, but not material to the operation of NCM Capital."
Sloan Financial was formed in 1991 to buy the portion of North Carolina Mutual Life Insurance Co. that became NCM. American Express invested $7 million to fund the purchase of NCM.
The employee alliance has it roots in a December 1996 visit to NCM Senior Vice President Rodney Hare by American Express executives Peter Anderson and Morris Goodwin.
Mr. Hare asked the American Express representatives if they would be interested in selling their 40% interest to a group of employees. The men allegedly said they would be interested in such a deal, according to the lawsuit.
Eight senior-level NCM executives -- including Messrs. Laborde, Verny and Hare and Ms. Walker -- formed a group to seek an equity partner to buy American Express' holdings. Because all employees involved were African-Americans, except Mr. Verny, the firm could keep its minority-owned firm market niche, the lawsuit states.
The employee group made numerous attempts to meet with Mr. Sloan, but he allegedly resisted. And when the group insisted he meet with them, presenting him with a formal letter of interest in the Amex holding, Mr. Sloan appeared angry, the lawsuit states.
When the employee group found two parties interested in discussing financing the sale, Mr. Sloan allegedly interfered and demolished the deal, the suit claims.
In an interview, Mr. Sloan said it always had been his intention to buy Amex's holding, something that was written into his agreement with Amex.
Mr. Sloan said he may be in a position to make the purchase by the end of this year. He intends to sell shares in Sloan Financial to three senior employees on May 15.
Amex's Mr. Anderson, senior vice president of investments and a member of the Sloan Financial board, said his firm has been pleased with the performance of NCM.
He would not comment on the lawsuit.