Wachovia National Bank and William A. Fickling Jr., former president and CEO of Charter Medical Corp., agreed to pay $42 million to Charters ESOP as part of a legal settlement with the Labor Departments pension office.
Wachovia entered the agreement as a successor to South Carolina National Bank, against which the DOL filed a suit alleging that the bank caused the ESOP to overpay for 11.8 million shares of Charter Medical that it bought from Mr. Fickling and various relatives. The DOL alleged the bank breached its fiduciary duty by relying on an unreliable valuation of the shares prepared by Interstate/Johnson Lane Corp.
Under the settlement, Wachovia will pay the ESOP $30 million and Mr. Fickling will pay $12 million. The money will be allocated proportionally to past and current participants and beneficiaries. The ESOP was created in 1988 and covered about 13,000 participants in 1990. Charter Medical, now known as Magellan Health Care Services Inc., emerged from bankruptcy proceedings and a reorganization in July 1992.