Thompson weighs in on trading claim: Former Wachovia CEO disputes shareholder suit that says he, other bank leaders made unusual stock deals.

Oct 10, 2009 (The Charlotte Observer - McClatchy-Tribune Information Services via COMTEX) -- WB | Quote | Chart | News | PowerRating -- Ken Thompson is fighting back in court filings.

In a lawsuit filed last week, Charlotte businessman Cameron Harris accuses the former Wachovia Corp. chief executive and other departed Wachovia leaders of "unusual and suspicious" stock trades ahead of the bank's demise.

While Thompon hasn't responded to that suit, he has disputed almost identical claims in a separate shareholder lawsuit now in U.S. District Court in New York.

Harris' suit uses the same calculations to allege that Thompson and two former lieutenants -- chief risk officer Don Truslow and chief financial officer Tom Wurtz -- were reaping gains from stock sales while telling the public the bank was faring well.

In a motion to dismiss the New York case, lawyers for Thompson, Truslow and Wurtz contended the executives actually increased their holdings over the period in question. Of the 33 stock sales the plaintiffs identified, 27 were made as part of transactions made to fund the exercising of stock options or to pay tax bills related to the exercising of stock options or the vesting of restricted stock, the motion said.

"The individual defendants actually increased their holdings of Wachovia stock by over 52 percent during the class period," the motion states.

In response, Harris' attorney, Ian Freeman, noted that the executives were selling shares they directly owned, while gaining shares awarded to them through option grants from the company.

Harris' lawsuit, filed in Mecklenburg County Superior Court, stirred waves in Charlotte because it publicly aired a dispute among prominent business leaders. It also raised questions as to whether Harris was seeking insider information about the bank from Thompson. Harris' attorney has disputed that notion.

The lawsuit -- joined by Harris' wife, Dee-Dee, and son Gary -- accused Wachovia and its leaders of fraud and other offenses, citing upbeat public and private statements about the bank's prospects in the months leading up to its near collapse and sale to Wells Fargo & Co. The bank's demise has been largely blamed on troubled mortgage loans inherited in its 2006 acquisition of California-based mortgage giant Golden West Financial Corp.

The bank and former executives named as defendants in the case haven't commented on the suit and have not filed a response.

According to the Harrises' suit, Thompson made $5.2 million, Truslow $3.6 million and Wurtz $3.7 million from stock sales from 2006 to 2008. The suit contends the executives were more frequent sellers in the months after their decision to buy Golden West than in prior months.

In the New York case, lawyers for the defendants said the complaint ignored open market purchases made by Thompson and Truslow in 2007, while excluding sales the executives made in the months before Golden West.

For example, Thompson bought 100,000 shares for about $4 million in November 2007, a purchase not mentioned in either suit. Over the period covered by the New York suit -- May 2006 to September 2008 -- Thompson's direct holdings increased to 882,172 shares from 649,297 shares, according to the motion to dismiss. A judge hasn't yet ruled on the motion, as the case is being aligned with another similar shareholder complaint.

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