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Driver Management Discloses Irrefutable Evidence of First United’s Lies and Attempts to Collude With Maryland Commissioner

May 18, 2020 GMT

NEW YORK--(BUSINESS WIRE)--May 18, 2020--

Driver Management Company LLC (together with its affiliates, “Driver” or “we”), the largest shareholder of First United Corporation (NASDAQ: FUNC) (“First United” or the “Company”), today announced that it has obtained documents that disprove First United’s repeated denials of meddling with shareholder rights and expose the Company’s scheme to leverage its close relationship with state regulators to punish shareholders who refuse to toe its line. A presentation summarizing First United’s desperate lobbying of the Maryland Commissioner of Financial Regulation (the “Maryland Commissioner”) is available at www.RenovateMyBank.com.


As previously disclosed, Driver learned in late January 2020 that the Maryland Commissioner—First United’s primary regulator—had opened an investigation into whether Driver’s acquisition of common shares in 2019 (totaling 5.08% of the Company’s shares) constituted a “stock acquisition” under Section 3-314 of the Maryland Financial Institutions Code. A “stock acquisition” refers to a change in controlling interest of a Maryland bank or bank holding company, the power to direct management or the power to direct policy. At the time, Driver thought the premise of the investigation was not only unfounded, but particularly odd because to Driver’s knowledge, the Maryland Commissioner had never previously asserted—ever—that such a purchase might implicate the statute.

In response to Driver’s request under the Maryland Public Information Act (“PIA”), we are now able to see that the Maryland Commissioner’s entire investigation was the brainchild of First United. The investigation was clearly instigated by a request from First United’s counsel directly to the Maryland Commissioner himself. Documents produced to Driver for the first time on May 15, 2020 show that First United’s lawyer—Andrew Bulgin of Gordon Feinblatt LLC—first developed the theory during or before October 2019, introduced it to the Maryland Commissioner before Halloween, compiled and submitted a dossier of materials ostensibly in support of finding a violation on November 1, and actively encouraged state officials to investigate Driver. Mr. Bulgin then supplemented those materials over the course of several months, repeatedly asserting First United’s “strongly held belief” that Driver’s purchases violated Section 3-314 and constantly soliciting updates on the status of the supposedly non-public investigation. All the while, First United’s public filings and statements persisted in denying any involvement in the investigation, which it attempted to characterize as a regulatory matter solely between the Commissioner and Driver. It turns out First United was lying.


Despite Driver’s numerous Securities and Exchange Commission (“SEC”) filings, including a September 2019 13D filing and several subsequent disclosures, it was First United that prompted a state regulatory probe of our share purchases. The Company instigated this probe based on a self-serving interpretation—which Driver has repeatedly refuted—of an arcane Maryland statute (one that the Maryland Commissioner has never previously interpreted as applying in this type of situation). Indeed, as part of our PIA request, Driver sought any documents reflecting that the Maryland Commissioner has advanced such a novel theory in any prior investigation—related to First United or otherwise—at any time in the past five years. The Maryland Commissioner was unable to identify a single instance.

The evidence available at www.RenovateMyBank.com validates our belief that First United embarked on this extraordinary exercise to entrench its Board of Directors (the “Board”) and subvert the change desired by a growing number of shareholders.

As a reminder, Driver has nominated a slate of three highly-qualified, independent nominees for election to First United’s eleven-member Board at the Annual Meeting of Shareholders on June 11, 2020. We urge shareholders to vote to elect Driver’s entire slate on the WHITEProxy Card.

To lend context, Driver has issued the below open letter to shareholders.

Fellow Shareholders,

Documents that we received on Friday from the Maryland Commissioner pursuant to our PIA request clearly show that:

  • First United instigated the Maryland Commissioner’s investigation into Driver’s purchase of the Company’s common shares with the express intent of invalidating our nomination of director candidates and stripping our voting rights for five years;

  • First United affirmatively sought to hide its collusion with the Maryland Commissioner while publicly lying (including in proxy solicitation materials and a press release this morning) about the extent of its lobbying and coordinated actions with state regulators;

  • First United contemplated reporting other shareholders to regulators after they expressed their discontent through public and private channels, and;

  • First United fundamentally fails to understand what it means to be a public company and to be accountable to shareholders.

It is almost hard to believe that First United’s dismal corporate governance and poor treatment of shareholders is actually far more shocking than anyone could have imagined. The e-mails between First United’s attorney—Mr. Bulgin—and the Maryland Commissioner paint the picture of a paranoid, self-interested Board far more focused on retaining power and harming Driver than anything else.

Since the fall, First United has been in constant dialogue with the Maryland Commissioner regarding its coordinated effort to violate Driver’s rights by prohibiting us from voting our shares without due process. In hindsight, it is obvious why First United blithely rejected shareholders’ calls for First United to explore a sale this past fall when the Company’s share price was near its all-time high: the Board knew it had a friendly regulator at its disposal, one it hoped would use taxpayers’ resources to harass shareholders and director nominees while trying to strip them of their voting rights.

First United’s efforts to lobby the Maryland Commissioner to undermine corporate democracy represents an extreme example of entrenchment and a blatant misuse of corporate resources. In addition, the facts revealed by this new trove of documents raise fundamental questions regarding whether the Board breached its fiduciary duties of good faith and loyalty as well as the incumbent directors’ fitness to serve at a public company.

The communications sent by Mr. Bulgin clearly contradict First United’s recent claims about not having influence over the Maryland Commissioner’s investigation. 1 As reported, Driver’s first notice of the supposedly non-public investigation was via a letter dated January 21, 2020, sent by first-class mail and received by us several days later. It is more than coincidental that on January 22, 2020, Mr. Bulgin e-mailed the Maryland Commissioner’s office asking whether Driver had yet received the non-public inquiry letter, and suggesting that officials send Driver a copy by e-mail at an address provided by Mr. Bulgin. 2 Over a period of weeks, First United’s representative repeatedly offered to forward documents as they were filed, spoon-fed the staff the Company’s self-serving legal theories and inquired repeatedly (now also including the Assistant Director of Enforcement) as to Driver’s response to the inquiry. All the while, the Maryland Commissioner declined to even sit down for an interview with us and seemingly ignored compelling evidence—including multiple legal opinions from Maryland’s Attorney General—demonstrating that First United’s interpretation of this obscure filing requirement was wildly off base.

Incredibly, following months of lobbying, Mr. Bulgin e-mailed the Maryland Commissioner’s staff on February 28, 2020—about 20 minutes after Driver submitted its initial response to the Maryland Commissioner’s inquiry—asking them to conceal the central role played by Mr. Bulgin and his client, First United:

“I don’t know when your meeting with Driver is, but, as I stated during our meeting, it is extremely important to FUNC that Driver not walk away from that meeting feeling that FUNC instigated your investigation.”3

We find it equally disturbing that First United obviously had Mr. Bulgin attack other shareholders in his communications with the Maryland Commissioner and raise that the Company considered reporting those investors to the SEC. 4 The notion that aggrieved shareholders should be secretly reported to regulators runs completely counter to First United’s long-standing claim that it appreciates and values investor feedback. Evidently, that claim just represents another one of the many fabrications that First United has been peddling to shareholders.

We are currently evaluating all legal claims that Driver may have against First United, its Board, its advisors (including Mr. Bulgin and his law firm), and others. Given that the facts uncovered by our PIA request confirm our long-standing suspicions regarding First United’s attempts to collude with the Maryland Commissioner—and the Maryland Commissioner’s apparent comfort engaging in routine dialogue about the non-public investigation—we may commence litigation to discover whether our suspicions regarding other instances of the Company’s faithless actions are similarly well founded, including with respect to the highly-suspect “strategic review” processes paid for by shareholders. In addition, we intend to raise this matter with the SEC and relevant Maryland authorities, so that a proper investigation of potential wrongdoing can take place. The Maryland Commissioner’s apparent complicity in First United’s machinations raises serious questions about its objectivity with regard to First United and the rigor of its safety and soundness of its examinations.

Finally, this is more than just another example of First United’s horrible corporate governance and disdain for shareholders: the evidence available at www.RenovateMyBank.com reveals a scheming Board willing to use deceit and corporate resources to deprive shareholders of valuable property rights in order to protect the status quo. To compound its shameful role in deploying Company resources to press the Maryland Commissioner to do its bidding, the Board has repeatedly lied to shareholders regarding the role it played and relied on its lawyers to try and hide the evidence.

If the Board is so willing to lie to shareholders about a matter where the truth can be easily discovered, what else have Carissa Rodeheaver and the incumbent directors lied to shareholders about?


Abbott Cooper
Managing Member
Driver Management Company LLC

As a reminder, shareholders can review the evidence obtained via our PIA request in presentation format at www.RenovateMyBank.com. The website also houses additional information regarding our case for change and how to vote on the WHITEProxy Card.

About Driver Management

Driver employs a valued-oriented, event-driven investment strategy that focuses exclusively on equities in the U.S. banking sector. The firm’s leadership has decades of experience advising and engaging with bank management teams and boards of directors on strategies for enhancing shareholder value.

1 First United’s “Investor Presentation” released on May 15, 2020.

2 E-mail from Andrew Bulgin dated January 22, 2020.

3 E-mail from Andrew Bulgin dated February 28, 2020.

4 E-mail from Andrew Bulgin dated November 8, 2019.

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CONTACT: Investors:

Saratoga Proxy Consulting

John Ferguson / Joe Mills, 212-257-1311




Greg Marose / Charlotte Kiaie, 347-343-2999




SOURCE: Driver Management Company LLC

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PUB: 05/18/2020 11:51 AM/DISC: 05/18/2020 11:51 AM