The union-owned insurer, whose directors face accusations of insider trading, announced the decision three days after a special advisory committee to the board concluded that the directors who made large profits selling the company’s stock had violated no laws and should not be required to surrender their profits, according to a report by Washington-based legal publisher BNA.
However, several union officials said that the advisory committee’s conclusions clashed with those of the special counsel’s report, which was prepared by former Illinois governor, James Thompson. The Thompson report found evidence that several Ullico board members had violated their fiduciary duties to the insurer’s union shareholders when they made more than $6 million in profits trading the company’s stock.
In committing the alleged violations, the report found it likely that the directors who engaged in stock trades had breached their fiduciary duty and thus committed a violation of state civil laws. The report found no criminal law violations (See Report Release Dispute Prompts ULLICO Board Resignations ).
Further, the report concluded Robert Georgine, Ullico’s chairman and chief executive, made more than $2 million in selling Ullico’s stock shortly before the insurer’s board, which periodically reset the stock price, established a much lower price. Several other directors, many of them current or former presidents of the building trades unions, made profits of more than $150,000 each (See ULLILCO Kicks off Internal Inquiry ).
Ullico’s board had blocked the release of the Thompson report since it was completed on November 26, 2002. The Department of Labor (DoL), the Securities and Exchange Commission (SEC) and the Justice Department have all subpoenaed the report for their own investigation into the Ullico trades.