Spencer Klein spoke to American Banker about the shareholders’ reaction to Mid-Southern Bancorp buying out an investor at a hefty premium.
“There’s nothing per se illegal about buying shares back from an individual shareholder on a non-pro rata basis,” Spencer said. “I don’t know that the buyback is problematic from a securities law point of view. But it could be problematic from a fiduciary duty and shareholder relations point of view.”
He added that other shareholders “have a right to ask what corporate purpose was served by using their money to buy back shares at a significant premium.”
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