Former Enquirer Publisher Bill Keating Looking To End Gannett Stock Lawsuit? $1.3 Million Settlement Deal On Table

Keating Case Settlement Talks

CINCINNATI (TDB) -- A two-week old court filing in Cincinnati discloses that Bill Keating's lawyers said they would accept $1.3 million to settle the retired Gannett Co. Inc. newspaper exec's lawsuit against his investment advisers.  Keating contends a $20 million investment portfolio was mismanaged.  He and his wife, Nancy, lost $6 million on holdings in Gannett (43,558 shares) and Fifth Third Bank (225,000 shares).  Settlement discussions with a private mediator have taken place.  They failed.  But with the case heading for December 8 trial there is a good chance the talks will be revived under court supervision.  The court filing says:  "The parties engaged a mediator and conducted a partial day of mediation to no avail.  More recently Defendants increased their offer to $500,000 and Plaintiffs reduced their demand to $1,300,000."  That indicates there was movement.

The defense contends Keating was sophisticated about business and investing and should have known that investors can lose money, as well as make money, in stocks.  The trend line is not always up:   "Plaintiffs took on the risk inherent in the market when they invested the portfolios in securities."  Keating is a former GOP congressman from Cincinnati who ran Gannett's newspaper operations in Detroit and Cincinnati.  He was chairman of the Associated Press from 1987-1992.  He was vice president and general counsel of Gannett.  Keating claims he ordered his investment advisers at Sena Weller Rohs and Williams LLC in Cincinnati to aggressively liquidate his stakes in the Gannett media chain and the bank.  He said he wanted a diversified investment portfolio.  He says his orders were not followed.  Keating had served on Fifth Third's board of directors.  The investment advisers said Keating never gave orders to liquidate and reinvest.  In the pre-trial statement filed with Hamilton County Common Pleas Judge Jerome J. Metz Jr., -- the same document that disclosed the settlement offer -- Keating's investment advisers describe the lawsuit as a case of sour grapes that grew out of Wall Street's sharp declines.  The defense lawyers pointed out that all securities markets got clobbered by the same percentages that Keating got clobbered:

"The evidence will show that Plaintiffs received and reviewed monthly statements, quarterly statements and dozens of letters regarding their portfolio.  Since they did not object then, they cannot do so now.  Plaintiffs can prove no damages.  During the period of their relationship all securities markets declined between 40% and 50%, the same amount that the portfolios declined.  Even though Plaintiffs have not alleged a conversion, they argue that a conversion measure of damages, or the New York Rule should be used.  If the proper measure of damages is used Plaintiffs have none, since they are in essentially the same position they would have been in had they received what they now claim they wanted."

Former Enquirer Publisher Bill Keating Feuds With Financial Advisor: Claims $2.5 Million Loss On Gannett Stock

CINCINNATI (TDB) -- So far, this peek into the lives of the rich and famous, about wealth and how it is managed in Cincinnati, hasn't seemed to make many ripples here in the city where it is unfolding. Bill Keating, a former GOP congressman from Ohio who ran Gannett's newspaper operations in Cincinnati and Detroit, contends his $20 million investment portfolio was mismanaged. He wanted his newspaper stocks dumped, and dumped quickly. His lawyers claim Keating and his wife, Nancy, took a $6 million hit on holdings in Gannett (43,558 shares) and Fifth Third Bank (225,000 shares) that Keating ordered aggressively liquidated. Keating says his orders were not followed. Keating says in an affidavit filed with his lawsuit in Hamilton County that his instructions were given before the economy slipped into recession and the share prices sank to historic lows. Both the bank and the newspaper chain have been beaten up on Wall Street -- Fifth Third for lackluster management and Gannett for the erosion of print publishing in the face of online challenges. Keating had been an insider at both corporations. He served on Cincinnati-based Fifth Third's board for much of the 1980s and 1990s. At Gannett -- the nation's largest newspaper publisher -- he ran the Cincinnati Enquirer, was president of the company Central Newspaper Group, was v.p and general counsel of Gannett Co. Inc., and ran the Detroit Newspaper Agency which published the News and Free Press. He was chairman of the Associated Press from 1987-1992. His brother, Charles, was the poster boy of the S&L scandal in the early 1990s.

In his Jan. 6, 2010 affidavit, Keating said: "Both before and after investment accounts were opened with SWRW LLC, I and members of my family made clear on numerous instances our instructions to William T. Sena Sr. and William T. Sena Jr., to immediately liquidate the Fifth Third and Gannett holdings and reinvest the process so as to create a well diversified investment portfolio."

The Sena's see things differently. They have submitted several memos (see an example above) that were sent to Keating about efforts to manage the $20 million account. The financial advisors said their strategy was to unwind the portfolio piecemeal. The Sena's lawyer, Charles Reynolds, said during a Hamilton County Common Pleas court hearing last month that Keating gave no direct order to liquidate the shares:

"There are no documents which say sell Fifth Third. There are no e-mails that say sell Fifth Third or Gannett. There is nothing in writing that exists that says sell Fifth Third. All we have is the oral representations supposedly in place to sell Fifth Third. It is a 20-month relationship. Each month the Keatings got account statements. Several times a week, there are phone calls. Interspersed with that is written communications from Bill Sena describing what the account is doing."

Reynolds also noted during the hearing that Bill and Nancy Keating could have sold their stocks at any time on their own:

"Mr. and Mrs. Keating were the trustees at all times in question and they could have at any point before or after June 2007, diversified their portfolio. In fact, it would have been a simple matter to buy an S&P 500 fund and achieve complete diversification without the need to buy individual stocks. They elected not to do that. They elected to come to Sena, Weller, Rohs, Williams and Mr. Sena Sr., in particular, to use his investment expertise to make those stocks decisions, including the buy and selling of Fifth Third stock."

The lawsuit is pending under the caption Charles Miller, Trustee et al v. Sena Weller Rohs Williams LLC et al, Case No. A0911952. It is assigned to Hamilton County Common Pleas Judge Jerome J. Metz, who has scheduled a case management conference and hearing for Feb. 17 in his Cincinnati courtroom. The docket is available on the clerk of court's website.