A former E. F. Hutton Group executive filed a $30-million class-action lawsuit claiming he and other Hutton employees were gypped out of promised shares in the brokerage house when it was acquired by Shearson Lehman Bros. Holdings Inc.
The suit, filed in U.S. District Court in Manhattan by Christopher J. Harris, accused Hutton, Shearson and a Shearson subsidiary, SLBP Acquisition Corp., of breach of contract and fiduciary duty.
A spokesman for Hutton, Robert Sharkey, said the company's lawyers had not yet seen the court papers, "so it would be inappropriate for us to comment."
There was no answer at a Shearson spokesman's office when called for comment Monday evening.
Harris, of Morristown, N.J., a former Hutton administrator, claimed in court papers that he and other "key employees" were promised equity shares, as a so-called golden handcuff, to induce them "to stay with the company through a period of corporate uncertainity."
Employees were told that the harder they worked the more stock they would be eligible for and their interest would be protected in the event of a merger or acquisition of Hutton.
As of December, when Hutton and Shearson merged, its employees had earned equity grants of about 1.8 million shares, with a cash value of $29.25 each, according to court papers.
The shares were to be vested over varying periods of time beginning in 1989 unless the company went through a "change of control," at which time the shares were to be vested immediately, said Harris' lawyer, Judith P. Vladek.
But when Shearson acquired Hutton last month, claimed Vladek, senior officers and Hutton's management committee members "manipulated the definition."