A disgruntled Bank of Bermuda investor has charged senior management with not acting in the best interest of shareholders following their decision to sell the Island?s largest financial institution to multinational HSBC for $1.3 billion in cash.

James Ellman, president of Seacliff Capital, LLC in San Francisco, made the claim in a letter to the editor of after a one-hour conference call with bank CEO Henry Smith and CFO Edward Gomez on Friday.

Mr. Ellman had already aired his views that shareholders were being ?robbed? in the deal, as reported in Friday?s with the bank being sold for $40 per share. Mr. Ellman, whose investment fund holds several hundred thousand dollars worth of shares in the Bank of Bermuda, said on Friday that, after his conversation with the bank?s executive officers he was still convinced that shareholders could get a better price. And he held to his predictions that the bank?s stock would trade at least $50 over the next year if it was not sold.

The Bank of Bermuda announced last Tuesday that it had accepted an offer from global banking giant HSBC Plc to sell the bank for $40 per share and in addition, the bank would give shareholders a $5 per share cash dividend. The total offer per share was 16 percent more than the bank?s share price over the last three months.

Meanwhile, bank management have said the price of $45 to shareholders was fair and was backed by an independent analysis from Merrill Lynch.

Following his call with Mr. Smith and Mr. Gomez, Mr. Ellman wrote: ?I am afraid that they were not able to convince me that they were doing anything other than placing their own personal interests above those of the shareholders. This comment from the CEO (Henry Smith) is particularly telling: ?The deal is a fair deal, maybe not a great deal, but a fair deal for the shareholders ? and a fair deal for the other stakeholders.?

Mr. Ellman said that flew in the face of the chief executive?s responsibility to shareholders.

?The CEO?s fiduciary responsibility at a publicly traded company, if his company is to be sold, is to negotiate a great deal for the shareholders ? ?fair? does not make the cut,? he said.

Mr. Ellman said he had also questioned the bank on why it had not made the $5 special divided to shareholders, which comes from the bank?s surplus in capital, before the sale.?They (Mr. Smith and Mr. Gomez) also told me that Merrill Lynch suggested that the market would have reacted negatively to paying out the excess capital as a special $5 per share dividend (without a sale to HSBC). If this is a true statement, it was terrible advice ? and remember, Merrill only gets paid a big fee if the deal gets done ? but we will probably never know the truth as management never gave the market a chance to react to such a news event.?

Mr. Ellman continued: ?I was also told that they did not travel to New York, Boston, London, etc. to see if meeting with potential investors would lead to a higher share price ? and that the reason was due to legal advice that since HSBC had indicated they were interested in a deal, that Bank of Bermuda could not go on a roadshow.?

Mr. Ellman said that advice did not fit with the actions of another recent bank take-over.

?Note that Fleet Boston sold out to Bank of America this week ? and negotiations did not preclude Fleet?s management from talking to investors, presenting at investor conferences,? he said.

In Mr. Ellman?s comments on the deal last week, he said the bank could have got a better price had they gone the auction route. However, COO Philip Butterfield told last Thursdaythat the Bermuda Government would not have allowed that to happen and regardless it may not have netted the bank a better sale price.

Mr. Ellman said: ?Your paper quoted BoB?s COO as stating, ?that I do not believe that an auction would have resulted in a higher price as everybody would have been scratching, picking, poking, and prodding and that isn?t necessarily the best route to achieving an optimum return?.

?This ?picking and prodding? is called due diligence. The process is common, expected and leads to the highest price for a stock. Usually a data room is set up where prospective bidders can look at the internal books and talk to management. Fleet Boston clearly was ?prodded and picked?, and that company?s shareholders are very happy for the process.?

He concluded that his feeling was that the bank?s executive officers could have their own reasons ? including healthy stock option plans to be cashed out ? for seeing the deal go through.